In 2012 Ryan Lance was appointed CEO of ConocoPhillips (NYSE:COP). First, this article will compare CEO compensation with compensation at other large companies. Next, we’ll consider growth that the business demonstrates. 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 Ryan Lance’s Compensation Compare With Similar Sized Companies?
According to our data, ConocoPhillips has a market capitalization of US$74b, and pays its CEO total annual compensation worth US$22m. (This is based on the year to December 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$1.7m. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).
Thus we can conclude that Ryan Lance receives more in total compensation than the median of a group of large companies in the same market as ConocoPhillips. 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, below, how CEO compensation at ConocoPhillips has changed over time.
Is ConocoPhillips Growing?
Over the last three years ConocoPhillips has grown its earnings per share (EPS) by an average of 103% per year (using a line of best fit). Its revenue is up 25% over last year.
This demonstrates that the company has been improving recently. A good result. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. It could be important to check this free visual depiction of what analysts expect for the future.
Has ConocoPhillips Been A Good Investment?
Most shareholders would probably be pleased with ConocoPhillips for providing a total return of 68% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared the total CEO remuneration paid by ConocoPhillips, and compared it to remuneration at a group of other large companies. Our data suggests that it pays above the median CEO pay within that group.
However, the earnings per share growth over three years is certainly impressive. On top of that, in the same period, returns to shareholders have been great. As a result of this good performance, the CEO remuneration may well be quite reasonable. Shareholders may want to check for free if ConocoPhillips insiders are buying or selling shares.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.