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Dorian LPG (NYSE:LPG) Ltd., a shipping company with a market capitalization of approximately $1 billion and an impressive "GREAT" financial health score according to InvestingPro, has updated its executive compensation program to align more closely with industry standards and enhance corporate governance transparency. The changes, announced in a recent SEC filing, were adopted by the Compensation Committee of the Board of Directors and will apply to the company’s named executive officers. The company’s strong financial position, with a current ratio of nearly 4x, suggests it has ample resources to support these compensation initiatives.
The new compensation structure introduces pre-established performance criteria and potential payouts. The annual cash bonus payments will now be determined based on a formula that includes three weighted performance metrics: 40% will be tied to the company’s EBITDA targets (with current EBITDA at $241.7 million), 25% to safety metrics compared to industry benchmarks, and 35% to qualitative assessments of individual performance. The potential payouts under these calculations can range from 0% to 200% of base salary. For detailed analysis of Dorian LPG’s financial metrics and executive compensation benchmarks, investors can access the comprehensive Pro Research Report available on InvestingPro.
In addition, the Committee has revised the approach to awarding restricted shares and stock units under the company’s equity incentive plan. The value of each executive’s grant will be based on a multiple of their salary. Furthermore, 20% of the total restricted share award will be governed by two equally weighted metrics: relative total shareholder return (TSR) and return on net invested capital (RONIC). The company currently maintains a strong return on invested capital of 9% and return on equity of 16%, demonstrating effective capital management. TSR will be measured against a pre-selected peer group, while RONIC will be calculated using a specific equation and analyzed with a three-year rolling average. The number of shares awarded can range from zero to double, depending on the achievement levels.
This overhaul is designed to promote the company’s long-term strategy, provide competitive incentives, and mitigate excessive risk-taking by balancing the focus on performance measures. The enhanced transparency and defined metrics are expected to enable shareholders to better understand the link between executive compensation and company performance.
The SEC filing also notes that additional information on compensation for the fiscal year ended March 31, 2025, will be included in the company’s Proxy Statement for the upcoming Annual Meeting of Shareholders. This information is based on a press release statement.
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