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Is American Vanguard Corporation’s (NYSE:AVD) CEO Pay Justified?

Casey Hall

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Eric Wintemute became the CEO of American Vanguard Corporation (NYSE:AVD) in 1994. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for American Vanguard

How Does Eric Wintemute’s Compensation Compare With Similar Sized Companies?

Our data indicates that American Vanguard Corporation is worth US$555m, and total annual CEO compensation is US$2.2m. (This number is for the twelve months until 2017). While we always look at total compensation first, we note that the salary component is less, at US$636k. We examined companies with market caps from US$200m to US$800m, and discovered that the median CEO compensation of that group was US$1.5m.

It would therefore appear that American Vanguard Corporation pays Eric Wintemute more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at American Vanguard has changed from year to year.

NYSE:AVD CEO Compensation, February 20th 2019

Is American Vanguard Corporation Growing?

Over the last three years American Vanguard Corporation has grown its earnings per share (EPS) by an average of 42% per year (using a line of best fit). Its revenue is up 35% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Shareholders might be interested in this free visualization of analyst forecasts.

Has American Vanguard Corporation Been A Good Investment?

I think that the total shareholder return of 41%, over three years, would leave most American Vanguard Corporation shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary…

We compared the total CEO remuneration paid by American Vanguard Corporation, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. On top of that, in the same period, returns to shareholders have been great. As a result of this good performance, the CEO remuneration may well be quite reasonable. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at American Vanguard.

Important note: American Vanguard may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.