Yahoo Finance Is Patterson-UTI Energy, Inc. (NASDAQ:PTEN) Overpaying Its CEO?
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In 2012 Andy Hendricks was appointed CEO of Patterson-UTI Energy, Inc. (NASDAQ:PTEN). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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 Patterson-UTI Energy
How Does Andy Hendricks’s Compensation Compare With Similar Sized Companies?
Our data indicates that Patterson-UTI Energy, Inc. is worth US$2.9b, and total annual CEO compensation is US$14m. (This number is for the twelve months until 2017). While we always look at total compensation first, we note that the salary component is less, at US$854k. When we examined a selection of companies with market caps ranging from US$2.0b to US$6.4b, we found the median CEO compensation was US$4.8m.
It would therefore appear that Patterson-UTI Energy, Inc. pays Andy Hendricks more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
The graphic below shows how CEO compensation at Patterson-UTI Energy has changed from year to year.
Is Patterson-UTI Energy, Inc. Growing?
Over the last three years Patterson-UTI Energy, Inc. has grown its earnings per share (EPS) by an average of 63% per year (using a line of best fit). It achieved revenue growth of 41% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It’s great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. You might want to check this free visual report on analyst forecasts for future earnings.
Has Patterson-UTI Energy, Inc. Been A Good Investment?
With a three year total loss of 0.03%, Patterson-UTI Energy, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
In Summary…
We examined the amount Patterson-UTI Energy, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. However, the returns to investors are far less impressive, over the same period. Considering the per share profit growth, but keeping in mind the weak returns, we’d need more time to form a view on CEO compensation. So you may want to check if insiders are buying Patterson-UTI Energy shares with their own money (free access).
If you want to buy a stock that is better than Patterson-UTI Energy, this free list of high return, low debt companies is a great place to look.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
