DFDS Chairman: Our top execs are worth the money

"The positive development at DFDS benefits all shareholders, and I'm very pleased with the fact that options for the executives are now becoming valuable," says DFDS Chairman Bent Østergaard about the large financial bonuses awarded to senior management.

Photo: PR-foto/Lauritzen Fonden

The two top executives at DFDS, CEO Niels Smedegaard and CFO Torben Carlsen, have reaped big financial benefits in the shape of shares and options in the company as part of their salary packages. The share price on a DFDS share has five-doubled since the start of 2013 with recent years of massive economic growth at the Danish shipping and logistics company.

Niels Smedegaard and Torben Carlsen have currently invested in DFDS for a combined total USD 12.8 million. From June 2015 and until the middle of May this year, the two executives have sold DFDS shares worth a total of USD 27.5 million. If the share continues to develop in a positive direction over the next three years, it could mean more millions for the executive duo as they have investments in DFDS worth five or ten times their annual salaries.

However, the Chairman of the Board at DFDS tells ShippingWatch that he is quite pleased with the development.

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"We have had option deals for the executives at DFDS for many years. Sometimes they have been granted options which weren't worth much. In recent years, the share price in DFDS has grown considerably, so I'm very pleased with the fact that options for the executives, which they received three years ago, are now worth some money and which they can now start utilizing," says Chairman Bent Østergaard, who also serves as CEO of Lauritzen Fonden.

These years, the foundation must be particularly satisfied with the returns from DFDS in its capacity as controlling shareholder with a 44.1 percent stake during a time when the foundation's fully-owned carrier J. Lauritzen has lost hundreds of millions of dollars in recent years following the meltdown in the global dry bulk industry.

The DFDS market value was down to USD 300 million at one point while the market value of the company today stands at more than USD 2.8 billion.

The graph below shows the price development for the DFDS share in 2016

Source: DFDS

"All shareholders in DFDS have benefited greatly from the development. The way that senior management has run the company has provided record results, just as 2016 looks set to be positive. So I'm fine with the fact that the share options are becoming valuable. That's why we implemented them, in order to give management and other employees the motivation to give it their all."

Healthy for the company

Do you think that the option deals for senior management at DFDS have influenced how the company has been operated?

"It's hard to say. I definitely don't think that the option deals are the main reason why things are going well at DFDS, but I do believe that these deals are healthy for the company."

Do you view this as an expression of the DFDS executive management performing and for that reason getting value from it?

"They have definitely performed. You have to remember how much the value of the company has grown in the past three years. This has really benefited all of the shareholders who held on to their shares. So it's completely fair that it also benefits the employees with option deals," says Bent Østergaard.

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International consultant company Boston Consulting Group recently published an analysis of which companies provide 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.

Torben Carlsen, CFO at DFDS, told ShippingWatch recently that Niels Smedegaard's and his own investments in DFDS have experienced ongoing and year-on-year growth.

"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 said.

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