Mike Dugan became the CEO of EchoStar Corporation (NASDAQ:SATS) in 2009, 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 EchoStar Corporation's CEO Compensation With the industry
Our data indicates that EchoStar Corporation has a market capitalization of US$2.9b, and total annual CEO compensation was reported as US$2.5m for the year to December 2019. Notably, that's an increase of 26% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.0m.
In comparison with other companies in the industry with market capitalizations ranging from US$2.0b to US$6.4b, the reported median CEO total compensation was US$6.9m. This suggests that Mike Dugan is paid below the industry median. Furthermore, Mike Dugan directly owns US$1.3m worth of shares in the company.
Talking in terms of the industry, salary represented approximately 24% of total compensation out of all the companies we analyzed, while other remuneration made up 76% of the pie. It's interesting to note that EchoStar pays out a greater portion of remuneration through salary, compared to the industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
EchoStar Corporation's Growth
Over the last three years, EchoStar Corporation has shrunk its earnings per share by 81% per year. In the last year, its revenue is up 3.9%.
The decline in EPS is a bit concerning. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has EchoStar Corporation Been A Good Investment?
With a three year total loss of 50% for the shareholders, EchoStar Corporation would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
As previously discussed, Mike is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. Over the last three years, shareholder returns have been downright disappointing, and EPSgrowth has been equally disappointing. It's tough to say that Mike is earning a very high compensation, but shareholders will likely want to see healthier investor returns before agreeing that a raise is in order.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for EchoStar that investors should think about before committing capital to this stock.
Important note: EchoStar is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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