Brad Childers became the CEO of Archrock, Inc. (NYSE:AROC) in 2011. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Brad Childers's Compensation Compare With Similar Sized Companies?
Our data indicates that Archrock, Inc. is worth US$1.6b, and total annual CEO compensation was reported as US$5.9m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$818k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations from US$1.0b to US$3.2b, and the median CEO total compensation was US$4.1m.
As you can see, Brad Childers is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Archrock, Inc. is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Archrock has changed from year to year.
Is Archrock, Inc. Growing?
Over the last three years Archrock, Inc. has grown its earnings per share (EPS) by an average of 111% per year (using a line of best fit). Its revenue is up 11% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. You might want to check this free visual report on analyst forecasts for future earnings.
Has Archrock, Inc. Been A Good Investment?
Archrock, Inc. has generated a total shareholder return of 0.9% over three years, so most shareholders wouldn't be too disappointed. But they would probably prefer not to see CEO compensation far in excess of the median.
We compared total CEO remuneration at Archrock, Inc. with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
However, the earnings per share growth over three years is certainly impressive. We also think investors are doing ok, over the same time period. So, considering the EPS growth we do not wish to criticize the level of CEO compensation, though we'd recommend further research on management. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Archrock (free visualization of insider trades).
Important note: Archrock may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.