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PBF Energy Inc. (NYSE:PBF) has not performed well recently and CEO Tom Nimbley will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 27 May 2021. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.
Comparing PBF Energy Inc.'s CEO Compensation With the industry
According to our data, PBF Energy Inc. has a market capitalization of US$1.8b, and paid its CEO total annual compensation worth US$4.9m over the year to December 2020. We note that's a decrease of 51% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$875k.
In comparison with other companies in the industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$3.4m. Accordingly, our analysis reveals that PBF Energy Inc. pays Tom Nimbley north of the industry median. What's more, Tom Nimbley holds US$6.2m 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. In PBF Energy's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
PBF Energy Inc.'s Growth
Over the last three years, PBF Energy Inc. has shrunk its earnings per share by 110% per year. Its revenue is down 40% over the previous year.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has PBF Energy Inc. Been A Good Investment?
With a total shareholder return of -65% over three years, PBF Energy Inc. shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.
Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.
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 1 warning sign for PBF Energy that investors should look into moving forward.
Important note: PBF Energy 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.
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