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Does CF Industries Holdings, Inc.’s (NYSE:CF) CEO Pay Reflect Performance?

Lawrence Carr

In 2014 W. Will was appointed CEO of CF Industries Holdings, Inc. (NYSE:CF). This analysis aims first to contrast CEO compensation with other large companies. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for CF Industries Holdings

How Does W. Will’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that CF Industries Holdings, Inc. has a market cap of US$9.8b, and is paying total annual CEO compensation of US$9.5m. (This number is for the twelve months until 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.2m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO compensation was US$11m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

That means W. Will receives fairly typical remuneration for the CEO of a large company. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance.

The graphic below shows how CEO compensation at CF Industries Holdings has changed from year to year.

NYSE:CF CEO Compensation January 28th 19

Is CF Industries Holdings, Inc. Growing?

On average over the last three years, CF Industries Holdings, Inc. has shrunk earnings per share by 12% each year. In the last year, its revenue is up 13%.

Few shareholders would be pleased to read that earnings per share are lower over three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration.

Shareholders might be interested in this free visualization of analyst forecasts. .

Has CF Industries Holdings, Inc. Been A Good Investment?

Most shareholders would probably be pleased with CF Industries Holdings, Inc. for providing a total return of 57% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary…

W. Will is paid around the same as most CEOs of large companies.

We’re not seeing great strides in earnings per share, but the company has clearly pleased some investors, given the returns over the last three years. So we think most shareholders wouldn’t be too worried about CEO compensation, which is close to the median for large companies. So you may want to check if insiders are buying CF Industries Holdings shares with their own money (free access).

Of course, the past can be informative so you might be interested in considering this analytical visualization showing the company history of earnings and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.