In the past three years, the share price of ONEOK, Inc. (NYSE:OKE) has struggled to generate growth for its shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 26 May 2021. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.
Comparing ONEOK, Inc.'s CEO Compensation With the industry
According to our data, ONEOK, Inc. has a market capitalization of US$24b, and paid its CEO total annual compensation worth US$10m over the year to December 2020. We note that's a small decrease of 7.3% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$850k.
On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$12m. So it looks like ONEOK compensates Terry Spencer in line with the median for the industry. What's more, Terry Spencer holds US$38m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
On an industry level, around 20% of total compensation represents salary and 80% is other remuneration. It's interesting to note that ONEOK allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
ONEOK, Inc.'s Growth
ONEOK, Inc. has seen its earnings per share (EPS) increase by 17% a year over the past three years. The trailing twelve months of revenue was pretty much the same as the prior period.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. 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 ONEOK, Inc. Been A Good Investment?
Given the total shareholder loss of 0.6% over three years, many shareholders in ONEOK, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 warning signs for ONEOK (of which 2 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.
Switching gears from ONEOK, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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.
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