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Is Intrepid Potash, Inc. (NYSE:IPI) Overpaying Its CEO?

Simply Wall St

In 2014 Bob Jornayvaz was appointed CEO of Intrepid Potash, Inc. (NYSE:IPI). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Intrepid Potash

How Does Bob Jornayvaz's Compensation Compare With Similar Sized Companies?

Our data indicates that Intrepid Potash, Inc. is worth US$280m, and total annual CEO compensation was reported as US$3.7m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$50k. 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$100m to US$400m, and the median CEO total compensation was US$1.1m.

Thus we can conclude that Bob Jornayvaz receives more in total compensation than the median of a group of companies in the same market, and of similar size to Intrepid Potash, Inc.. However, this doesn't necessarily mean the pay is too high. 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 Intrepid Potash has changed from year to year.

NYSE:IPI CEO Compensation, December 4th 2019

Is Intrepid Potash, Inc. Growing?

On average over the last three years, Intrepid Potash, Inc. has grown earnings per share (EPS) by 151% each year (using a line of best fit). It achieved revenue growth of 12% over the last year.

This demonstrates that the company has been improving recently. A good result. It's a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. You might want to check this free visual report on analyst forecasts for future earnings.

Has Intrepid Potash, Inc. Been A Good Investment?

Given the total loss of 13% over three years, many shareholders in Intrepid Potash, Inc. are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We compared total CEO remuneration at Intrepid Potash, Inc. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

However we must not forget that the EPS growth has been very strong over three years. On the other hand returns to investors over the same period have probably disappointed many. Considering the per share profit growth, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. So you may want to check if insiders are buying Intrepid Potash shares with their own money (free access).

Important note: Intrepid Potash 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.

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.

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. Thank you for reading.