Richard Adkerson became the CEO of Freeport-McMoRan Inc. (NYSE:FCX) in 2003. First, this article will compare CEO compensation with compensation at other large companies. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Richard Adkerson's Compensation Compare With Similar Sized Companies?
According to our data, Freeport-McMoRan Inc. has a market capitalization of US$17b, and paid its CEO total annual compensation worth US$16m over the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.6m. 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 over US$8.0b and the median CEO total compensation was US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.
As you can see, Richard Adkerson is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Freeport-McMoRan Inc. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Freeport-McMoRan has changed from year to year.
Is Freeport-McMoRan Inc. Growing?
Freeport-McMoRan Inc. has increased its earnings per share (EPS) by an average of 89% a year, over the last three years (using a line of best fit). Its revenue is down 29% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. Revenue growth is a real positive for growth, but ultimately profits are more important. It could be important to check this free visual depiction of what analysts expect for the future.
Has Freeport-McMoRan Inc. Been A Good Investment?
With a three year total loss of 25%, Freeport-McMoRan Inc. would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
We compared the total CEO remuneration paid by Freeport-McMoRan Inc., and compared it to remuneration at a group of other large companies. We found that it pays well over the median amount paid in the benchmark group.
However we must not forget that the EPS growth has been very strong over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Freeport-McMoRan (free visualization of insider trades).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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