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How Should Investors React To Koppers Holdings Inc.'s (NYSE:KOP) CEO Pay?

Simply Wall St

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Leroy Ball has been the CEO of Koppers Holdings Inc. (NYSE:KOP) since 2015. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Koppers Holdings

How Does Leroy Ball's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Koppers Holdings Inc. has a market cap of US$607m, and is paying total annual CEO compensation of US$4.0m. (This number is for the twelve months until December 2018). While we always look at total compensation first, we note that the salary component is less, at US$833k. We examined companies with market caps from US$400m to US$1.6b, and discovered that the median CEO total compensation of that group was US$2.7m.

As you can see, Leroy Ball is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Koppers Holdings Inc. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

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

NYSE:KOP CEO Compensation, July 5th 2019

Is Koppers Holdings Inc. Growing?

Over the last three years Koppers Holdings Inc. has grown its earnings per share (EPS) by an average of 71% per year (using a line of best fit). It achieved revenue growth of 13% over the last year.

This demonstrates that the company has been improving recently. A good result. It's a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. It could be important to check this free visual depiction of what analysts expect for the future.

Has Koppers Holdings Inc. Been A Good Investment?

Since shareholders would have lost about 4.8% over three years, some Koppers Holdings Inc. shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We examined the amount Koppers Holdings Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

However, the earnings per share growth over three years is certainly impressive. On the other hand returns to investors over the same period have probably disappointed many. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Koppers Holdings (free visualization of insider trades).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.