What We Learned About Iridium Communications' (NASDAQ:IRDM) CEO Compensation

Matt Desch became the CEO of Iridium Communications Inc. ( NASDAQ:IRDM ) in 2006, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Iridium Communications pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Iridium Communications

How Does Total Compensation For Matt Desch Compare With Other Companies In The Industry?

Our data indicates that Iridium Communications Inc. has a market capitalization of US$3.3b, and total annual CEO compensation was reported as US$3.5m for the year to December 2019. That's a fairly small increase of 4.9% over the previous year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$927k.

In comparison with other companies in the industry with market capitalizations ranging from US$2.0b to US$6.4b, the reported median CEO total compensation was US$1.2m. Hence, we can conclude that Matt Desch is remunerated higher than the industry median. Furthermore, Matt Desch directly owns US$18m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 28% of total compensation represents salary and 72% is other remuneration. Iridium Communications is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Iridium Communications Inc.'s Growth Numbers

Iridium Communications Inc. has reduced its earnings per share by 104% a year over the last three years. Its revenue is up 4.3% over the trailing twelve months.

The decline in EPS is a bit concerning. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. 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 Iridium Communications Inc. Been A Good Investment?

We think that the total shareholder return of 127%, over three years, would leave most Iridium Communications Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

As we touched on above, Iridium Communications Inc. is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. We feel that EPS have been a bit disappointing, but it's nice to see positive shareholder returns over the last three years. Considering positive investor returns, it would be bold of us to criticize CEO compensation, but shareholders might want to see healthier EPS growth before a raise is given out.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 2 warning signs for Iridium Communications (1 is concerning!) that you should be aware of before investing here.

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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