Shareholders May Be Wary Of Increasing Berry Corporation's (NASDAQ:BRY) CEO Compensation Package

The results at Berry Corporation (NASDAQ:BRY) have been quite disappointing recently and CEO Trem Smith bears some responsibility for this. 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.

Check out our latest analysis for Berry

How Does Total Compensation For Trem Smith Compare With Other Companies In The Industry?

According to our data, Berry Corporation has a market capitalization of US$495m, and paid its CEO total annual compensation worth US$9.6m over the year to December 2020. That's a notable increase of 80% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$650k.

In comparison with other companies in the industry with market capitalizations ranging from US$200m to US$800m, the reported median CEO total compensation was US$1.4m. This suggests that Trem Smith is paid more than the median for the industry. What's more, Trem Smith holds US$2.4m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 20% of total compensation out of all the companies we analyzed, while other remuneration made up 80% of the pie. In Berry's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Berry Corporation's Growth Numbers

Over the last three years, Berry Corporation has shrunk its earnings per share by 25% per year. Its revenue is down 27% over the previous 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. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Berry Corporation Been A Good Investment?

With a total shareholder return of -41% over three years, Berry Corporation shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Berry 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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