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In 2012 John Chisholm was appointed CEO of Flotek Industries, Inc. (NYSE:FTK). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does John Chisholm's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Flotek Industries, Inc. has a market cap of US$114m, and is paying total annual CEO compensation of US$1.8m. (This figure is for the year to December 2018). While we always look at total compensation first, we note that the salary component is less, at US$50k. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$497k.
Thus we can conclude that John Chisholm receives more in total compensation than the median of a group of companies in the same market, and of similar size to Flotek Industries, Inc.. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see a visual representation of the CEO compensation at Flotek Industries, below.
Is Flotek Industries, Inc. Growing?
Over the last three years Flotek Industries, Inc. has shrunk its earnings per share by an average of 96% per year (measured with a line of best fit). In the last year, its revenue is up 10%.
Few shareholders would be pleased to read that earnings per share are lower over three years. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has Flotek Industries, Inc. Been A Good Investment?
Since shareholders would have lost about 87% over three years, some Flotek Industries, Inc. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
We examined the amount Flotek Industries, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
We think many shareholders would be underwhelmed with the business growth over the last three years.
Arguably worse, investors are without a positive return for the last three years. Some might well form the view that the CEO is paid too generously! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Flotek Industries (free visualization of insider trades).
Important note: Flotek Industries may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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.