Andy Hendricks became the CEO of Patterson-UTI Energy, Inc. (NASDAQ:PTEN) in 2012. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Andy Hendricks's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Patterson-UTI Energy, Inc. has a market cap of US$2.1b, and is paying total annual CEO compensation of US$9.8m. (This number is for the twelve months until December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$1.0m. When we examined a selection of companies with market caps ranging from US$1.0b to US$3.2b, we found the median CEO total compensation was US$4.1m.
As you can see, Andy Hendricks is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Patterson-UTI Energy, Inc. is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at Patterson-UTI Energy has changed from year to year.
Is Patterson-UTI Energy, Inc. Growing?
On average over the last three years, Patterson-UTI Energy, Inc. has grown earnings per share (EPS) by 43% each year (using a line of best fit). In the last year, its revenue is down -3.0%.
This demonstrates that the company has been improving recently. A good result. 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 Patterson-UTI Energy, Inc. Been A Good Investment?
Since shareholders would have lost about 47% over three years, some Patterson-UTI Energy, Inc. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
We compared the total CEO remuneration paid by Patterson-UTI Energy, Inc., and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Patterson-UTI Energy.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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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.