We Think Shareholders May Want To Consider A Review Of Exxon Mobil Corporation's (NYSE:XOM) CEO Compensation Package

By
Simply Wall St
Published
May 19, 2021
NYSE:XOM
Source: Shutterstock

Shareholders will probably not be too impressed with the underwhelming results at Exxon Mobil Corporation (NYSE:XOM) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 26 May 2021. 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.

See our latest analysis for Exxon Mobil

How Does Total Compensation For Darren Woods Compare With Other Companies In The Industry?

At the time of writing, our data shows that Exxon Mobil Corporation has a market capitalization of US$256b, and reported total annual CEO compensation of US$16m for the year to December 2020. Notably, that's a decrease of 33% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.6m.

For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$12m. From this we gather that Darren Woods is paid around the median for CEOs in the industry. Moreover, Darren Woods also holds US$62m worth of Exxon Mobil stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary US$1.6m US$1.5m 10%
Other US$14m US$22m 90%
Total CompensationUS$16m US$23m100%

On an industry level, around 20% of total compensation represents salary and 80% is other remuneration. Exxon Mobil pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
NYSE:XOM CEO Compensation May 19th 2021

A Look at Exxon Mobil Corporation's Growth Numbers

Over the last three years, Exxon Mobil Corporation has shrunk its earnings per share by 79% per year. In the last year, its revenue is down 27%.

The decline in EPS is a bit concerning. 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Exxon Mobil Corporation Been A Good Investment?

Since shareholders would have lost about 12% over three years, some Exxon Mobil Corporation investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid 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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 1 warning sign for Exxon Mobil that investors should look into moving forward.

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.

If you decide to trade Exxon Mobil, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted


Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.