Tim Leach has been the CEO of Concho Resources Inc. (NYSE:CXO) since 2006, and this article will examine the executive’s compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Concho Resources.
Check out our latest analysis for Concho Resources
How Does Total Compensation For Tim Leach Compare With Other Companies In The Industry?
At the time of writing, our data shows that Concho Resources Inc. has a market capitalization of US$8.9b, and reported total annual CEO compensation of US$13m for the year to December 2019. That’s mostly flat as compared to the prior year’s compensation. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.1m.
On comparing similar companies from the same industry with market caps ranging from US$4.0b to US$12b, we found that the median CEO total compensation was US$12m. So it looks like Concho Resources compensates Tim Leach in line with the median for the industry. Furthermore, Tim Leach directly owns US$37m worth of shares in the company, implying that they are deeply invested in the company’s success.
Speaking on an industry level, nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. In Concho Resources’ case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Concho Resources Inc.’s Growth
Concho Resources Inc. has reduced its earnings per share by 111% a year over the last three years. It saw its revenue drop 16% over the last year.
Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. 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 Concho Resources Inc. Been A Good Investment?
Given the total shareholder loss of 63% over three years, many shareholders in Concho Resources Inc. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we noted earlier, Concho Resources pays its CEO in line with similar-sized companies belonging to the same industry. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. We’d stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
CEO compensation can have a massive impact on performance, but it’s just one element. We did our research and spotted 3 warning signs for Concho Resources that investors should look into moving forward.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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