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Paal Kibsgaard has been the CEO of Schlumberger Limited (NYSE:SLB) since 2011. First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Paal Kibsgaard’s Compensation Compare With Similar Sized Companies?
According to our data, Schlumberger Limited has a market capitalization of US$63b, and pays its CEO total annual compensation worth US$21m. (This figure is for the year to December 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$2.0m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO compensation was US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren’t that many of them.
It would therefore appear that Schlumberger Limited pays Paal Kibsgaard more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see a visual representation of the CEO compensation at Schlumberger, below.
Is Schlumberger Limited Growing?
On average over the last three years, Schlumberger Limited has shrunk earnings per share by 2.4% each year (measured with a line of best fit). Its revenue is up 7.8% over last year.
Unfortunately there is a complete lack of earnings per share improvement, over three years. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. It could be important to check this free visual depiction of what analysts expect for the future.
Has Schlumberger Limited Been A Good Investment?
Given the total loss of 32% over three years, many shareholders in Schlumberger Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
We compared the total CEO remuneration paid by Schlumberger Limited, and compared it to remuneration at a group of other large companies. We found that it pays well over the median amount paid in the benchmark group.
We think many shareholders would be underwhelmed with the business growth over the last three years.
Over the same period, investors would have come away with nothing in the way of share price gains. Some might well form the view that the CEO is paid too generously! So you may want to check if insiders are buying Schlumberger shares with their own money (free access).
If you want to buy a stock that is better than Schlumberger, this free list of high return, low debt companies is a great place to look.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.