Increases to Freeport-McMoRan Inc.'s (NYSE:FCX) CEO Compensation Might Cool off for now

By
Simply Wall St
Published
June 01, 2021
NYSE:FCX
Source: Shutterstock

CEO Richard Adkerson has done a decent job of delivering relatively good performance at Freeport-McMoRan Inc. (NYSE:FCX) recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 08 June 2021. However, some shareholders may still want to keep CEO compensation within reason.

See our latest analysis for Freeport-McMoRan

How Does Total Compensation For Richard Adkerson Compare With Other Companies In The Industry?

According to our data, Freeport-McMoRan Inc. has a market capitalization of US$65b, and paid its CEO total annual compensation worth US$17m over the year to December 2020. That's just a smallish increase of 6.2% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$613k.

On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$11m. This suggests that Richard Adkerson is paid more than the median for the industry. Furthermore, Richard Adkerson directly owns US$147m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary US$613k US$1.6m 4%
Other US$16m US$14m 96%
Total CompensationUS$17m US$16m100%

On an industry level, around 37% of total compensation represents salary and 63% is other remuneration. A high-salary is usually a no-brainer when it comes to attracting the best executives, but Freeport-McMoRan paid Richard Adkerson a nominal salary to the CEO over the past 12 months, instead focusing on non-salary compensation. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
NYSE:FCX CEO Compensation June 2nd 2021

A Look at Freeport-McMoRan Inc.'s Growth Numbers

Freeport-McMoRan Inc. has reduced its earnings per share by 7.4% a year over the last three years. In the last year, its revenue is up 21%.

Investors would be a bit wary of companies that have lower EPS On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Freeport-McMoRan Inc. Been A Good Investment?

We think that the total shareholder return of 150%, over three years, would leave most Freeport-McMoRan Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Freeport-McMoRan prefers rewarding its CEO through non-salary benefits. The overall company performance has been commendable, however there are still areas for improvement. EPS growth is still weak, and until that picks up, shareholders may find it hard to approve a pay rise for the CEO, since they are already paid above the average in their industry.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 4 warning signs for Freeport-McMoRan (of which 1 makes us a bit uncomfortable!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Freeport-McMoRan, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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