We Discuss Why Exterran Corporation's (NYSE:EXTN) CEO Compensation May Be Closely Reviewed

Shareholders will probably not be too impressed with the underwhelming results at Exterran Corporation (NYSE:EXTN) recently. At the upcoming AGM on 28 April 2021, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Exterran

How Does Total Compensation For Andrew Way Compare With Other Companies In The Industry?

Our data indicates that Exterran Corporation has a market capitalization of US$95m, and total annual CEO compensation was reported as US$5.4m for the year to December 2020. That's a slight decrease of 3.8% on the prior year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$751k.

For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$1.0m. This suggests that Andrew Way is paid more than the median for the industry. Furthermore, Andrew Way directly owns US$1.3m worth of shares in the company.

Component	2020	2019	Proportion (2020)
Salary	US$751k	US$825k	14%
Other	US$4.6m	US$4.8m	86%
Total Compensation	US$5.4m	US$5.6m	100%

On an industry level, roughly 23% of total compensation represents salary and 77% is other remuneration. Exterran sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Exterran Corporation's Growth

Over the last three years, Exterran Corporation has shrunk its earnings per share by 96% per year. Its revenue is down 23% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Exterran Corporation Been A Good Investment?

Few Exterran Corporation shareholders would feel satisfied with the return of -90% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

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 3 warning signs for Exterran that investors should think about before committing capital to this stock.

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. 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.
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