Key Insights

• Baker Hughes will host its Annual General Meeting on 13th of May
• CEO Lorenzo Simonelli's total compensation includes salary of US$1.59m
• The overall pay is comparable to the industry average
• Over the past three years, Baker Hughes' EPS grew by 96% and over the past three years, the total shareholder return was 42%

We have been pretty impressed with the performance at Baker Hughes Company (NASDAQ:BKR) recently and CEO Lorenzo Simonelli deserves a mention for their role in it. Shareholders will have this at the front of their minds in the upcoming AGM on 13th of May. This would also be a chance for them to hear the board review the financial results, discuss future company strategy and vote on any resolutions such as executive remuneration. Here is our take on why we think CEO compensation is not extravagant.

Comparing Baker Hughes Company's CEO Compensation With The Industry

Our data indicates that Baker Hughes Company has a market capitalization of US$32b, and total annual CEO compensation was reported as US$22m for the year to December 2023. Notably, that's an increase of 35% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.6m.

On comparing similar companies in the American Energy Services industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$18m. From this we gather that Lorenzo Simonelli is paid around the median for CEOs in the industry. Furthermore, Lorenzo Simonelli directly owns US$23m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 16% of total compensation represents salary and 84% is other remuneration. Baker Hughes sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Baker Hughes Company's Growth Numbers

Baker Hughes Company's earnings per share (EPS) grew 96% per year over the last three years. Its revenue is up 19% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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 Baker Hughes Company Been A Good Investment?

We think that the total shareholder return of 42%, over three years, would leave most Baker Hughes Company shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Some shareholders will probably be more lenient on CEO compensation in the upcoming AGM given the pleasing performance of the company recently. However, despite the strong growth in earnings and share price growth, the focus for shareholders would be how the company plans to steer the company towards sustainable profitability in the near future.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Baker Hughes that you should be aware of before investing.

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.

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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.