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Jeremy Thigpen has been the CEO of Transocean Ltd. (NYSE:RIG) since 2015, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Transocean pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
How Does Total Compensation For Jeremy Thigpen Compare With Other Companies In The Industry?
Our data indicates that Transocean Ltd. has a market capitalization of US$1.4b, and total annual CEO compensation was reported as US$9.9m for the year to December 2019. We note that's an increase of 16% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.0m.
On examining similar-sized companies in the industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$5.4m. Accordingly, our analysis reveals that Transocean Ltd. pays Jeremy Thigpen north of the industry median. Moreover, Jeremy Thigpen also holds US$2.0m worth of Transocean stock directly under their own name.
On an industry level, roughly 22% of total compensation represents salary and 78% is other remuneration. It's interesting to note that Transocean allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Transocean Ltd.'s Growth
Transocean Ltd.'s earnings per share (EPS) grew 55% per year over the last three years. Its revenue is up 6.9% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Transocean Ltd. Been A Good Investment?
Given the total shareholder loss of 77% over three years, many shareholders in Transocean Ltd. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
As previously discussed, Jeremy is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, we must not forget that the EPS growth has been very strong, but it's disappointing to see negative shareholder returns over the same period. Although we'd stop short of calling it inappropriate, we think Jeremy is earning a very handsome sum.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for Transocean you should be aware of, and 1 of them makes us a bit uncomfortable.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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