Shareholders will probably not be too impressed with the underwhelming results at CONSOL Energy Inc. (NYSE:CEIX) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 28 April 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.
Check out our latest analysis for CONSOL Energy
Comparing CONSOL Energy Inc.’s CEO Compensation With the industry
Our data indicates that CONSOL Energy Inc. has a market capitalization of US$306m, and total annual CEO compensation was reported as US$6.7m for the year to December 2020. That is, the compensation was roughly the same as last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$841k.
On examining similar-sized companies in the industry with market capitalizations between US$200m and US$800m, we discovered that the median CEO total compensation of that group was US$2.4m. This suggests that Jimmy Brock is paid more than the median for the industry. Moreover, Jimmy Brock also holds US$2.4m worth of CONSOL Energy stock directly under their own name.
Talking in terms of the industry, salary represented approximately 20% of total compensation out of all the companies we analyzed, while other remuneration made up 80% of the pie. In CONSOL Energy’s case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. 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 CONSOL Energy Inc.’s Growth Numbers
CONSOL Energy Inc. has reduced its earnings per share by 44% a year over the last three years. In the last year, its revenue is down 37%.
Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. 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 CONSOL Energy Inc. Been A Good Investment?
Few CONSOL Energy Inc. shareholders would feel satisfied with the return of -72% over three years. So shareholders would probably want the company to be less generous with CEO compensation.
Not only have shareholders not seen a favorable return on their investment, but the business hasn’t performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That’s why we did some digging and identified 3 warning signs for CONSOL Energy that investors should think about before committing capital to this stock.
Important note: CONSOL 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.
When trading CONSOL Energy or any other investment, use the platform considered by many to be the Professional’s Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.