This article will reflect on the compensation paid to Ryan Lance who has served as CEO of ConocoPhillips (NYSE:COP) since 2012. This analysis will also assess whether ConocoPhillips pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing ConocoPhillips' CEO Compensation With the industry
According to our data, ConocoPhillips has a market capitalization of US$38b, and paid its CEO total annual compensation worth US$30m over the year to December 2019. That's a notable increase of 30% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.7m.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$13m. This suggests that Ryan Lance is paid more than the median for the industry. What's more, Ryan Lance holds US$3.9m worth of shares in the company in their own name.
On an industry level, roughly 15% of total compensation represents salary and 85% is other remuneration. ConocoPhillips sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at ConocoPhillips' Growth Numbers
Over the past three years, ConocoPhillips has seen its earnings per share (EPS) grow by 63% per year. Its revenue is down 32% over the previous year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has ConocoPhillips Been A Good Investment?
Given the total shareholder loss of 21% over three years, many shareholders in ConocoPhillips are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
As previously discussed, Ryan is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. But the company has impressed with its EPS growth, but we cannot say the same about the uninspiring shareholder returns (over the last three years). Although we'd stop short of calling it inappropriate, we think Ryan is earning a very handsome sum.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 4 warning signs for ConocoPhillips that investors should look into moving forward.
Important note: ConocoPhillips is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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 firstname.lastname@example.org.