Massive economic gains in recent years at DFDS, along with the booming development in the share price, have been excellent business for senior management at the Danish shipping and logistics company, as the senior executives receive share options as part of their salary. The share price at DFDS has grown five times its size since the beginning of 2013.
Over the course of recent years the two top executives, CEO Niels Smedegaard and CFO Torben Carlsen, have divested shares totaling millions, according to a note from investment bank Carnegie, which has reviewed the continuous so-called insider announcements about DFDS executives' divestments from June 2015 until the middle of May.
With such great development at DFDS, it's clear that option deals will be more attractive than we had thought.
In total, the two executives sold shares in DFDS for a total of USD 27.5 million in this period. This amount, according to comments from market sources to ShippingWatch, is "impressive". But it is not an expression of the senior executives reducing their total investment in the company. It is actually the opposite.
"There has been an ongoing and year-on-year big growth in our investing in DFDS. Looking at the value of our combined share-holding, Niels Smedegaard and I have currently invested in shares worth USD 12.8 million in DFDS. In 2014, we had shares in DFDS worth USD one million," Torben Carlsen tells ShippingWatch, explaining that the investment is the equivalent of about five to ten times their annual salary, which is a signal that "most investors would appreciate".
The awarding of options to Smedegaard and Carlsen, which is the opportunity to acquire shares at a fixed low price, has presumably not stopped its favorable treatment yet. If the share continues its strong performance over the next three years, it could provide the executives with more million dollar gains. And maybe even more than they had planned for, says the CFO.
"With such great development at DFDS as we have seen in recent years, it's clear that option deals will be more attractive than expected in the beginning," Torben Carlsen tells ShippingWatch.
Niels Smedegaard and Torben Carlsen made the most recent divestment a few days ago on Friday, May 13th, selling shares in the carrier for a total value of USD 5.3 million. This was one day after publishing an interim report with the best result for DFDS ever in a first quarter. Meanwhile, DFDS upgraded its expectations for the full year after an operating profit before special items of USD 62.1 million at the beginning of 2016, a 77 percent improvement percent compared to the same period 2015.
The first quarter interim report made the DFDS share skyrocket by 8.3 percent and the share closed the day after with an additional increase of 5.2 percent landing at USD 46.6.
The other shareholders in DFDS, with Lauritzen Fonden as the biggest, have also experienced an excellent investment in DFDS and by global standards as well.
International consultant company, Boston Consulting Group, recently published an analysis of which companies gave the best returns to investors. The firm looked into share price growth and dividends in the period 2011 to 2015. And DFDS ranks at the very top in the transport sector.
If you bought a share in the Danish shipping and logistics company in 2011, the average annual return on the investment would be 30.1 percent until 2015. In the transport sector, this is only beat by Macquarie Infrastructure, a company which invests in infrastructure and delivered returns of 34.3 percent.
In the most recent interim report form DFDS, the earnings increased in all parts of the company's route network. The number of passengers grew by 25 percent while total freight volumes increased by 19 percent, and the activities in the English Channel in particular boosted growth in freight volumes and passengers by 36 percent.
The booming start to 2016 came on top of a 2015 with a total operating profit of about USD 309.5 million - the best in DFDS's history. In the annual report from February, DFDS announced that approximately USD 144 million would be distributed among shareholders based on an anticipated yield of USD 45 million in total, USD 0.75 per share, and two buy-back programs worth a total of USD 98 million.
One DFDS share cost about USD 9 at the start of 2013. Today, one share costs about five times as much.
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