Key Insights

• Chesapeake Energy's Annual General Meeting to take place on 6th of June
• CEO Nick Dell'Osso's total compensation includes salary of US$903.7k
• The total compensation is 49% less than the average for the industry
• Over the past three years, Chesapeake Energy's EPS fell by 65% and over the past three years, the total shareholder return was 97%

Performance at Chesapeake Energy Corporation (NASDAQ:CHK) has been rather uninspiring recently and shareholders may be wondering how CEO Nick Dell'Osso plans to fix this. At the next AGM coming up on 6th of June, they can influence managerial decision making through voting on resolutions, including executive remuneration. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. In our opinion, CEO compensation does not look excessive and we discuss why.

View our latest analysis for Chesapeake Energy

Comparing Chesapeake Energy Corporation's CEO Compensation With The Industry

Our data indicates that Chesapeake Energy Corporation has a market capitalization of US$12b, and total annual CEO compensation was reported as US$7.4m for the year to December 2023. Notably, that's a decrease of 10% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$904k.

In comparison with other companies in the American Oil and Gas industry with market capitalizations over US$8.0b, the reported median total CEO compensation was US$15m. In other words, Chesapeake Energy pays its CEO lower than the industry median. What's more, Nick Dell'Osso holds US$602k worth of shares in the company in their own name.

On an industry level, roughly 14% of total compensation represents salary and 86% is other remuneration. Chesapeake Energy pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Chesapeake Energy Corporation's Growth Numbers

Over the last three years, Chesapeake Energy Corporation has shrunk its earnings per share by 65% per year. Its revenue is down 64% over the previous year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. 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 Chesapeake Energy Corporation Been A Good Investment?

Most shareholders would probably be pleased with Chesapeake Energy Corporation for providing a total return of 97% over three years. 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.

To Conclude...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean these strong returns may not continue. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Chesapeake Energy that investors should think about before committing capital to this stock.

Switching gears from Chesapeake Energy, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.