Richard Adkerson has been the CEO of Freeport-McMoRan Inc. (NYSE:FCX) since 2003. This analysis aims first to contrast CEO compensation with 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. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Richard Adkerson's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Freeport-McMoRan Inc. has a market cap of US$14b, and is paying total annual CEO compensation of US$16m. (This number is for the twelve months until December 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.6m. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
It would therefore appear that Freeport-McMoRan Inc. pays Richard Adkerson more than the median CEO remuneration at large companies, in the same market. However, this fact alone doesn't mean the remuneration 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 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 118% a year, over the last three years (using a line of best fit). It saw its revenue drop -18% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. 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?
Given the total loss of 16% over three years, many shareholders in Freeport-McMoRan Inc. are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared total CEO remuneration at Freeport-McMoRan Inc. with the amount paid at 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. Whatever your view on compensation, you might want to check if insiders are buying or selling Freeport-McMoRan shares (free trial).
If you want to buy a stock that is better than Freeport-McMoRan, this free list of high return, low debt companies is a great place to look.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.