How Should Investors React To Iridium Communications Inc.'s (NASDAQ:IRDM) CEO Pay?
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Matt Desch has been the CEO of Iridium Communications Inc. (NASDAQ:IRDM) since 2006. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
See our latest analysis for Iridium Communications
How Does Matt Desch's Compensation Compare With Similar Sized Companies?
According to our data, Iridium Communications Inc. has a market capitalization of US$3.0b, and pays its CEO total annual compensation worth US$3.3m. (This is based on the year to December 2018). That's just a smallish increase of 6.8% on last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$900k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$2.0b to US$6.4b. The median total CEO compensation was US$5.3m.
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. Though positive, it's important we delve into the performance of the actual business.
The graphic below shows how CEO compensation at Iridium Communications has changed from year to year.
Is Iridium Communications Inc. Growing?
On average over the last three years, Iridium Communications Inc. has grown earnings per share (EPS) by 13% each year (using a line of best fit). Its revenue is up 16% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. It could be important to check this free visual depiction of what analysts expect for the future.
Has Iridium Communications Inc. Been A Good Investment?
Boasting a total shareholder return of 179% over three years, Iridium Communications Inc. has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
In Summary...
It looks like Iridium Communications Inc. pays its CEO less than similar sized companies. Since the business is growing, many would argue this suggests the pay is modest. The pleasing shareholder returns are the cherry on top; you might even consider that Matt Desch deserves a raise!
Most shareholders like to see a modestly paid CEO combined with strong performance by the company. The cherry on top would be if company insiders are buying shares with their own money. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Iridium Communications (free visualization of insider trades).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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.
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. Thank you for reading.
