In 2004 Teddy Gottwald was appointed CEO of NewMarket Corporation (NYSE:NEU). 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. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Teddy Gottwald’s Compensation Compare With Similar Sized Companies?
According to our data, NewMarket Corporation has a market capitalization of US$4.5b, and pays its CEO total annual compensation worth US$3.1m. (This number is for the twelve months until 2017). We think total compensation is more important but we note that the CEO salary is lower, at US$1.0m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$2.0b to US$6.4b. The median total CEO compensation was US$4.9m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you’ll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at NewMarket has changed from year to year.
Is NewMarket Corporation Growing?
Over the last three years NewMarket Corporation has shrunk its earnings per share by an average of 9.0% per year. Its revenue is up 8.0% over last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration.
Although we don’t have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has NewMarket Corporation Been A Good Investment?
NewMarket Corporation has generated a total shareholder return of 11% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
It looks like NewMarket Corporation pays its CEO less than similar sized companies.
Teddy Gottwald is remunerated more modestly than is a normal at similar sized companies. But the company lacks earnings per share growth, and returns to shareholders are less than stellar. We would like to see EPS growth from the business, although we wouldn’t say the CEO pay is high. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at NewMarket.
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 email@example.com.