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Neil Koehler became the CEO of Pacific Ethanol, Inc. (NASDAQ:PEIX) in 2005. First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Neil Koehler’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Pacific Ethanol, Inc. has a market cap of US$60m, and is paying total annual CEO compensation of US$1.1m. (This is based on the year to 2017). While we always look at total compensation first, we note that the salary component is less, at US$472k. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO compensation to be US$300k.
Thus we can conclude that Neil Koehler receives more in total compensation than the median of a group of companies in the same market, and of similar size to Pacific Ethanol, Inc.. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Pacific Ethanol has changed from year to year.
Is Pacific Ethanol, Inc. Growing?
On average over the last three years, Pacific Ethanol, Inc. has shrunk earnings per share by 27% each year (measured with a line of best fit). In the last year, its revenue is down -6.1%.
Unfortunately, earnings per share have trended lower over the last three years. This is compounded by the fact revenue is actually down on last year. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. It could be important to check this free visual depiction of what analysts expect for the future.
Has Pacific Ethanol, Inc. Been A Good Investment?
Given the total loss of 61% over three years, many shareholders in Pacific Ethanol, Inc. are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared total CEO remuneration at Pacific Ethanol, Inc. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.
Just as bad, share price gains for investors have failed to materialize, over the same period. This analysis suggests to us that the CEO is paid too generously! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Pacific Ethanol.
Important note: Pacific Ethanol 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.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.