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Is Iridium Communications Inc.'s (NASDAQ:IRDM) CEO Overpaid Relative To Its Peers?

Simply Wall St

In 2006 Matt Desch was appointed CEO of Iridium Communications Inc. (NASDAQ:IRDM). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Iridium Communications

How Does Matt Desch's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Iridium Communications Inc. has a market cap of US$3.2b, and reported total annual CEO compensation of US$3.3m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$900k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations from US$2.0b to US$6.4b, and the median CEO total compensation was US$5.1m.

Most shareholders would consider it a positive that Matt Desch takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion.

You can see, below, how CEO compensation at Iridium Communications has changed over time.

NasdaqGS:IRDM CEO Compensation, December 23rd 2019
NasdaqGS:IRDM CEO Compensation, December 23rd 2019

Is Iridium Communications Inc. Growing?

Iridium Communications Inc. has reduced its earnings per share by an average of 48% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 9.4%.

Sadly for shareholders, earnings per share are actually down, over three years. And the modest revenue growth over 12 months isn't much comfort against the reduced earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has Iridium Communications Inc. Been A Good Investment?

Boasting a total shareholder return of 138% over three years, Iridium Communications Inc. has done well by shareholders. 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...

It looks like Iridium Communications Inc. pays its CEO less than similar sized companies.

Matt Desch receives relatively low remuneration compared to similar sized companies. And while the company isn't growing earnings per share, total returns have been pleasing. Although we could see higher EPS growth, we'd argue the remuneration is not an issue, based on these observations. Whatever your view on compensation, you might want to check if insiders are buying or selling Iridium Communications shares (free trial).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.