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Does American Vanguard Corporation's (NYSE:AVD) CEO Salary Reflect Performance?

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In 1994 Eric Wintemute was appointed CEO of American Vanguard Corporation (NYSE:AVD). 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 - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for American Vanguard

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

According to our data, American Vanguard Corporation has a market capitalization of US$488m, and paid its CEO total annual compensation worth US$2.3m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$652k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a selection of companies with market caps ranging from US$200m to US$800m, we found the median CEO total compensation was US$1.8m.

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.

You can see, below, how CEO compensation at American Vanguard has changed over time.

NYSE:AVD CEO Compensation, February 28th 2020
NYSE:AVD CEO Compensation, February 28th 2020

Is American Vanguard Corporation Growing?

On average over the last three years, American Vanguard Corporation has grown earnings per share (EPS) by 19% each year (using a line of best fit). In the last year, its revenue is up 6.7%.

This demonstrates that the company has been improving recently. A good result. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. It could be important to check this free visual depiction of what analysts expect for the future.

Has American Vanguard Corporation Been A Good Investment?

With a three year total loss of 1.4%, American Vanguard Corporation would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

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. Our data suggests that it pays above the median CEO pay within that group.

However we must not forget that the EPS growth has been very strong over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. Considering the per share profit growth, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. So you may want to check if insiders are buying American Vanguard shares with their own money (free access).

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.

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.

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. Thank you for reading.