Here's Why Shareholders Should Examine NexTier Oilfield Solutions Inc.'s (NYSE:NEX) CEO Compensation Package More Closely

NexTier Oilfield Solutions Inc. (NYSE:NEX) has not performed well recently and CEO Robert Drummond will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 15 June 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for NexTier Oilfield Solutions

How Does Total Compensation For Robert Drummond Compare With Other Companies In The Industry?

At the time of writing, our data shows that NexTier Oilfield Solutions Inc. has a market capitalization of US$1.0b, and reported total annual CEO compensation of US$7.9m for the year to December 2020. Notably, that's an increase of 32% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$896k.

On comparing similar companies from the same industry with market caps ranging from US$400m to US$1.6b, we found that the median CEO total compensation was US$4.0m. Accordingly, our analysis reveals that NexTier Oilfield Solutions Inc. pays Robert Drummond north of the industry median. Moreover, Robert Drummond also holds US$2.6m worth of NexTier Oilfield Solutions stock directly under their own name.

Component	2020	2019	Proportion (2020)
Salary	US$896k	US$839k	11%
Other	US$7.1m	US$5.2m	89%
Total Compensation	US$7.9m	US$6.0m	100%

On an industry level, around 22% of total compensation represents salary and 78% is other remuneration. NexTier Oilfield Solutions 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.

NexTier Oilfield Solutions Inc.'s Growth

Over the last three years, NexTier Oilfield Solutions Inc. has shrunk its earnings per share by 107% per year. In the last year, its revenue is down 60%.

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 NexTier Oilfield Solutions Inc. Been A Good Investment?

Few NexTier Oilfield Solutions Inc. shareholders would feel satisfied with the return of -66% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

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, the board will get the chance to explain the steps it plans to take to improve business performance.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for NexTier Oilfield Solutions that investors should be aware of in a dynamic business environment.

Important note: NexTier Oilfield Solutions is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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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