We Discuss Why Natural Gas Services Group, Inc.'s (NYSE:NGS) CEO Compensation May Be Closely Reviewed

Shareholders will probably not be too impressed with the underwhelming results at Natural Gas Services Group, Inc. (NYSE:NGS) recently. At the upcoming AGM on 17 June 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. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for Natural Gas Services Group

How Does Total Compensation For Steve Taylor Compare With Other Companies In The Industry?

Our data indicates that Natural Gas Services Group, Inc. has a market capitalization of US$148m, and total annual CEO compensation was reported as US$3.2m for the year to December 2020. We note that's an increase of 31% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$612k.

In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$849k. Accordingly, our analysis reveals that Natural Gas Services Group, Inc. pays Steve Taylor north of the industry median. What's more, Steve Taylor holds US$6.0m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	US$612k	US$607k	19%
Other	US$2.6m	US$1.8m	81%
Total Compensation	US$3.2m	US$2.4m	100%

Speaking on an industry level, nearly 22% of total compensation represents salary, while the remainder of 78% is other remuneration. It's interesting to note that Natural Gas Services Group allocates a smaller portion of compensation to salary 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.

Natural Gas Services Group, Inc.'s Growth

Over the last three years, Natural Gas Services Group, Inc. has shrunk its earnings per share by 89% per year. In the last year, its revenue is down 12%.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Natural Gas Services Group, Inc. Been A Good Investment?

Few Natural Gas Services Group, Inc. shareholders would feel satisfied with the return of -51% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

So you may want to check if insiders are buying Natural Gas Services Group shares with their own money (free access).

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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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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