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Is Gulf Island Fabrication, Inc.'s (NASDAQ:GIFI) CEO Being Overpaid?

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Simply Wall St
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Kirk Meche became the CEO of Gulf Island Fabrication, Inc. (NASDAQ:GIFI) in 2013. 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.

Check out our latest analysis for Gulf Island Fabrication

How Does Kirk Meche's Compensation Compare With Similar Sized Companies?

Our data indicates that Gulf Island Fabrication, Inc. is worth US$82m, and total annual CEO compensation was reported as US$2.1m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$483k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$510k.

As you can see, Kirk Meche is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Gulf Island Fabrication, 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 Gulf Island Fabrication has changed from year to year.

NasdaqGS:GIFI CEO Compensation, November 4th 2019
NasdaqGS:GIFI CEO Compensation, November 4th 2019

Is Gulf Island Fabrication, Inc. Growing?

Over the last three years Gulf Island Fabrication, Inc. has shrunk its earnings per share by an average of 29% per year (measured with a line of best fit). Its revenue is up 30% over last year.

As investors, we are a bit wary of companies that have lower earnings per share, over three years. But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. It could be important to check this free visual depiction of what analysts expect for the future.

Has Gulf Island Fabrication, Inc. Been A Good Investment?

Given the total loss of 44% over three years, many shareholders in Gulf Island Fabrication, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We examined the amount Gulf Island Fabrication, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. Although we'd stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Gulf Island Fabrication (free visualization of insider trades).

Important note: Gulf Island Fabrication 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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.