Yahoo Finance It's Unlikely That Independence Contract Drilling, Inc.'s (NYSE:ICD) CEO Will See A Huge Pay Rise This Year
Key Insights
Independence Contract Drilling will host its Annual General Meeting on 5th of June
Salary of US$552.0k is part of CEO John Gallegos's total remuneration
Total compensation is 97% above industry average
Independence Contract Drilling's three-year loss to shareholders was 64% while its EPS grew by 70% over the past three years
The underwhelming share price performance of Independence Contract Drilling, Inc. (NYSE:ICD) in the past three years would have disappointed many shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 5th of June. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
Check out our latest analysis for Independence Contract Drilling
Comparing Independence Contract Drilling, Inc.'s CEO Compensation With The Industry
Our data indicates that Independence Contract Drilling, Inc. has a market capitalization of US$21m, and total annual CEO compensation was reported as US$2.0m for the year to December 2023. We note that's a decrease of 66% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$552k.
On comparing similar-sized companies in the American Energy Services industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$1.0m. Accordingly, our analysis reveals that Independence Contract Drilling, Inc. pays John Gallegos north of the industry median. Furthermore, John Gallegos directly owns US$788k worth of shares in the company.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$552k | US$480k | 28% |
Other | US$1.4m | US$5.4m | 72% |
Total Compensation | US$2.0m | US$5.9m | 100% |
On an industry level, around 15% of total compensation represents salary and 85% is other remuneration. According to our research, Independence Contract Drilling has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Independence Contract Drilling, Inc.'s Growth
Independence Contract Drilling, Inc. has seen its earnings per share (EPS) increase by 70% a year over the past three years. In the last year, its revenue is down 10%.
Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. 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 Independence Contract Drilling, Inc. Been A Good Investment?
The return of -64% over three years would not have pleased Independence Contract Drilling, Inc. shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. 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.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 3 warning signs for Independence Contract Drilling that investors should be aware of in a dynamic business environment.
Important note: Independence Contract Drilling 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.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
