We Think Helmerich & Payne, Inc.'s (NYSE:HP) CEO Compensation Package Needs To Be Put Under A Microscope

The results at Helmerich & Payne, Inc. (NYSE:HP) have been quite disappointing recently and CEO John Lindsay bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 01 March 2022. 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.

View our latest analysis for Helmerich & Payne

How Does Total Compensation For John Lindsay Compare With Other Companies In The Industry?

According to our data, Helmerich & Payne, Inc. has a market capitalization of US$3.5b, and paid its CEO total annual compensation worth US$8.5m over the year to September 2021. Notably, that's an increase of 27% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.0m.

On comparing similar companies from the same industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$3.5m. This suggests that John Lindsay is paid more than the median for the industry. Furthermore, John Lindsay directly owns US$16m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	US$1.0m	US$1.0m	12%
Other	US$7.4m	US$5.6m	88%
Total Compensation	US$8.5m	US$6.6m	100%

On an industry level, roughly 22% of total compensation represents salary and 78% is other remuneration. In Helmerich & Payne's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Helmerich & Payne, Inc.'s Growth Numbers

Over the last three years, Helmerich & Payne, Inc. has shrunk its earnings per share by 57% per year. Its revenue is down 1.7% over the previous year.

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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Helmerich & Payne, Inc. Been A Good Investment?

Given the total shareholder loss of 26% over three years, many shareholders in Helmerich & Payne, Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 2 warning signs (and 1 which can't be ignored) in Helmerich & Payne we think you should know about.

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.