Shareholders Will Probably Hold Off On Increasing Gulf Island Fabrication, Inc.'s (NASDAQ:GIFI) CEO Compensation For The Time Being

Key Insights

• Gulf Island Fabrication's Annual General Meeting to take place on 16th of May
• Total pay for CEO Richard Heo includes US$487.0k salary
• The overall pay is 85% above the industry average
• Over the past three years, Gulf Island Fabrication's EPS fell by 3.2% and over the past three years, the total shareholder return was 63%

Despite strong share price growth of 63% for Gulf Island Fabrication, Inc. (NASDAQ:GIFI) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 16th of May. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

Check out our latest analysis for Gulf Island Fabrication

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

Our data indicates that Gulf Island Fabrication, Inc. has a market capitalization of US$109m, and total annual CEO compensation was reported as US$1.9m for the year to December 2023. Notably, that's a decrease of 10% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$487k.

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. Hence, we can conclude that Richard Heo is remunerated higher than the industry median. What's more, Richard Heo holds US$4.4m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$487k	US$469k	26%
Other	US$1.4m	US$1.6m	74%
Total Compensation	US$1.9m	US$2.1m	100%

Talking in terms of the industry, salary represented approximately 15% of total compensation out of all the companies we analyzed, while other remuneration made up 85% of the pie. Gulf Island Fabrication is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Gulf Island Fabrication, Inc.'s Growth Numbers

Over the last three years, Gulf Island Fabrication, Inc. has shrunk its earnings per share by 3.2% per year. In the last year, its revenue is down 25%.

The decline in EPS is a bit concerning. 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. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Gulf Island Fabrication, Inc. Been A Good Investment?

Boasting a total shareholder return of 63% over three years, Gulf Island Fabrication, Inc. has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Gulf Island Fabrication that you should be aware of before investing.

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.

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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.