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Hess Corporation's (NYSE:HES) CEO Compensation Looks Acceptable To Us And Here's Why

Under the guidance of CEO John Hess, Hess Corporation (NYSE:HES) has performed reasonably well recently. As shareholders go into the upcoming AGM on 02 June 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. We present our case of why we think CEO compensation looks fair.

See our latest analysis for Hess

Comparing Hess Corporation's CEO Compensation With the industry

According to our data, Hess Corporation has a market capitalization of US$25b, and paid its CEO total annual compensation worth US$11m over the year to December 2020. That's a notable decrease of 17% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.5m.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$12m. So it looks like Hess compensates John Hess in line with the median for the industry. What's more, John Hess holds US$2.0b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2020

2019

Proportion (2020)

Salary

US$1.5m

US$1.5m

13%

Other

US$9.6m

US$12m

87%

Total Compensation

US$11m

US$13m

100%

On an industry level, roughly 20% of total compensation represents salary and 80% is other remuneration. It's interesting to note that Hess allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

A Look at Hess Corporation's Growth Numbers

Hess Corporation's earnings per share (EPS) grew 8.6% per year over the last three years. Its revenue is down 16% over the previous year.

We would prefer it if there was revenue growth, but the modest improvement in EPS is good. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Hess Corporation Been A Good Investment?

We think that the total shareholder return of 43%, over three years, would leave most Hess Corporation shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. In saying that, any proposed increase to CEO compensation will still be assessed on how reasonable it is based on performance and industry benchmarks.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for Hess that investors should be aware of in a dynamic business environment.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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