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We Think Genco Shipping & Trading Limited's (NYSE:GNK) CEO Compensation Package Needs To Be Put Under A Microscope

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·4 min read
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Shareholders will probably not be too impressed with the underwhelming results at Genco Shipping & Trading Limited (NYSE:GNK) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 13 May 2021. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for Genco Shipping & Trading

How Does Total Compensation For John Wobensmith Compare With Other Companies In The Industry?

At the time of writing, our data shows that Genco Shipping & Trading Limited has a market capitalization of US$682m, and reported total annual CEO compensation of US$2.2m for the year to December 2020. We note that's a decrease of 8.3% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$650k.

In comparison with other companies in the industry with market capitalizations ranging from US$400m to US$1.6b, the reported median CEO total compensation was US$1.7m. This suggests that John Wobensmith is paid more than the median for the industry. Moreover, John Wobensmith also holds US$5.8m worth of Genco Shipping & Trading stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2020

2019

Proportion (2020)

Salary

US$650k

US$650k

30%

Other

US$1.5m

US$1.7m

70%

Total Compensation

US$2.2m

US$2.4m

100%

On an industry level, around 22% of total compensation represents salary and 78% is other remuneration. It's interesting to note that Genco Shipping & Trading pays out a greater portion of remuneration through salary, compared to the industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ceo-compensation

A Look at Genco Shipping & Trading Limited's Growth Numbers

Over the last three years, Genco Shipping & Trading Limited has shrunk its earnings per share by 41% per year. It saw its revenue drop 8.7% over the last year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Genco Shipping & Trading Limited Been A Good Investment?

With a three year total loss of 2.8% for the shareholders, Genco Shipping & Trading Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for Genco Shipping & Trading that investors should be aware of in a dynamic business environment.

Important note: Genco Shipping & Trading is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.