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It's Unlikely That Freeport-McMoRan Inc.'s (NYSE:FCX) CEO Will See A Huge Pay Rise This Year

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CEO Richard Adkerson has done a decent job of delivering relatively good performance at Freeport-McMoRan Inc. (NYSE:FCX) recently. As shareholders go into the upcoming AGM on 08 June 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders will still be cautious of paying the CEO excessively.

See our latest analysis for Freeport-McMoRan

How Does Total Compensation For Richard Adkerson Compare With Other Companies In The Industry?

At the time of writing, our data shows that Freeport-McMoRan Inc. has a market capitalization of US$65b, and reported total annual CEO compensation of US$17m for the year to December 2020. That's a modest increase of 6.2% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$613k.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$11m. This suggests that Richard Adkerson is paid more than the median for the industry. Furthermore, Richard Adkerson directly owns US$147m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2020

2019

Proportion (2020)

Salary

US$613k

US$1.6m

4%

Other

US$16m

US$14m

96%

Total Compensation

US$17m

US$16m

100%

Talking in terms of the industry, salary represented approximately 37% of total compensation out of all the companies we analyzed, while other remuneration made up 63% of the pie. A high-salary is usually a no-brainer when it comes to attracting the best executives, but Freeport-McMoRan paid Richard Adkerson a nominal salary to the CEO over the past 12 months, instead focusing on non-salary compensation. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

A Look at Freeport-McMoRan Inc.'s Growth Numbers

Freeport-McMoRan Inc. has reduced its earnings per share by 7.4% a year over the last three years. In the last year, its revenue is up 21%.

The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Freeport-McMoRan Inc. Been A Good Investment?

Boasting a total shareholder return of 150% over three years, Freeport-McMoRan Inc. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Freeport-McMoRan primarily uses non-salary benefits to reward its CEO. The overall company performance has been commendable, however there are still areas for improvement. Until EPS growth picks back up, we think shareholders may find it hard to justify increasing CEO pay given that they are already paid above industry average.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 4 warning signs (and 1 which doesn't sit too well with us) in Freeport-McMoRan we think you should know about.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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 editorial-team (at) simplywallst.com.