The results at Intrepid Potash, Inc. (NYSE:IPI) have been quite disappointing recently and CEO Bob Jornayvaz bears some responsibility for this. At the upcoming AGM on 19 May 2021, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.
How Does Total Compensation For Bob Jornayvaz Compare With Other Companies In The Industry?
Our data indicates that Intrepid Potash, Inc. has a market capitalization of US$307m, and total annual CEO compensation was reported as US$2.1m for the year to December 2020. We note that's a decrease of 25% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$51k.
For comparison, other companies in the same industry with market capitalizations ranging between US$200m and US$800m had a median total CEO compensation of US$2.9m. This suggests that Intrepid Potash remunerates its CEO largely in line with the industry average. Moreover, Bob Jornayvaz also holds US$7.5m worth of Intrepid Potash stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 17% of total compensation represents salary and 83% is other remuneration. Intrepid Potash has chosen to walk a path less trodden, opting to compensate its CEO with less of a traditional salary and more non-salary rewards over the last year. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Intrepid Potash, Inc.'s Growth Numbers
Over the last three years, Intrepid Potash, Inc. has shrunk its earnings per share by 66% per year. Its revenue is down 10% over the previous year.
Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. 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 Intrepid Potash, Inc. Been A Good Investment?
The return of -53% over three years would not have pleased Intrepid Potash, Inc. shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
Intrepid Potash prefers rewarding its CEO through non-salary benefits. 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 can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for Intrepid Potash that investors should be aware of in a dynamic business environment.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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