Intrepid Potash, Inc. (NYSE:IPI) has not performed well recently and CEO Bob Jornayvaz will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 19 May 2021. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.
How Does Total Compensation For Bob Jornayvaz Compare With Other Companies In The Industry?
Our data indicates that Intrepid Potash, Inc. has a market capitalization of US$307m, and total annual CEO compensation was reported as US$2.1m for the year to December 2020. That's a notable decrease of 25% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$51k.
On examining similar-sized companies in the industry with market capitalizations between US$200m and US$800m, we discovered that the median CEO total compensation of that group was US$2.9m. This suggests that Intrepid Potash remunerates its CEO largely in line with the industry average. Moreover, Bob Jornayvaz also holds US$7.5m worth of Intrepid Potash stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 17% of total compensation represents salary and 83% is other remuneration. Interestingly, the company has chosen to go down an unconventional route in that it pays a smaller salary to Bob Jornayvaz as compared to non-salary compensation over the one-year period examined. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Intrepid Potash, Inc.'s Growth Numbers
Intrepid Potash, Inc. has reduced its earnings per share by 66% a year over the last three years. It saw its revenue drop 10% over the last year.
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. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Intrepid Potash, Inc. Been A Good Investment?
With a total shareholder return of -53% over three years, Intrepid Potash, Inc. shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.
Intrepid Potash primarily uses non-salary benefits to reward its CEO. 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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Intrepid Potash that you should be aware of before investing.
Switching gears from Intrepid Potash, 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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