Key Insights

• Gulf Island Fabrication's Annual General Meeting to take place on 16th of May
• Total pay for CEO Richard Heo includes US$487.0k salary
• Total compensation is 85% above industry average
• Gulf Island Fabrication's total shareholder return over the past three years was 63% while its EPS was down 3.2% over the past three years

The share price of Gulf Island Fabrication, Inc. (NASDAQ:GIFI) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 16th of May. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

How Does Total Compensation For Richard Heo Compare With Other Companies In The Industry?

At the time of writing, our data shows that Gulf Island Fabrication, Inc. has a market capitalization of US$109m, and reported total annual CEO compensation of US$1.9m for the year to December 2023. Notably, that's a decrease of 10% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$487k.

For comparison, other companies in the American Energy Services industry with market capitalizations below US$200m, reported a median total CEO compensation of US$1.0m. Accordingly, our analysis reveals that Gulf Island Fabrication, Inc. pays Richard Heo north of the industry median. What's more, Richard Heo holds US$4.4m 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 15% of total compensation out of all the companies we analyzed, while other remuneration made up 85% of the pie. Gulf Island Fabrication pays out 26% of remuneration in the form of a salary, significantly higher than the industry average. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Gulf Island Fabrication, Inc.'s Growth

Over the last three years, Gulf Island Fabrication, Inc. has shrunk its earnings per share by 3.2% per year. It saw its revenue drop 25% over the last year.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Gulf Island Fabrication, Inc. Been A Good Investment?

Boasting a total shareholder return of 63% over three years, Gulf Island Fabrication, 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.

To Conclude...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Gulf Island Fabrication that investors should think about before committing capital to this stock.

Important note: Gulf Island Fabrication is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.