Mike Kearney became the CEO of Frank's International N.V. (NYSE:FI) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Frank's International N.V.'s CEO Compensation With the industry
According to our data, Frank's International N.V. has a market capitalization of US$378m, and paid its CEO total annual compensation worth US$4.2m over the year to December 2019. That's a notable increase of 49% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$750k.
On comparing similar companies from the same industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$3.2m. Accordingly, our analysis reveals that Frank's International N.V. pays Mike Kearney north of the industry median. What's more, Mike Kearney holds US$637k worth of shares in the company in their own name.
On an industry level, around 21% of total compensation represents salary and 79% is other remuneration. It's interesting to note that Frank's International allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Frank's International N.V.'s Growth Numbers
Over the last three years, Frank's International N.V. has shrunk its earnings per share by 19% per year. Its revenue is down 15% over the previous year.
The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Frank's International N.V. Been A Good Investment?
With a three year total loss of 74% for the shareholders, Frank's International N.V. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we noted earlier, Frank's International pays its CEO higher than the norm for similar-sized companies belonging to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Frank's International that you should be aware of before investing.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.
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