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Bob Patel became the CEO of LyondellBasell Industries N.V. (NYSE:LYB) in 2015. 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. This method should give us information to assess how appropriately the company pays the CEO.
How Does Bob Patel’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that LyondellBasell Industries N.V. has a market cap of US$33b, and is paying total annual CEO compensation of US$18m. (This figure is for the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.5m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO compensation was US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren’t that many of them.
As you can see, Bob Patel is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean LyondellBasell Industries N.V. is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at LyondellBasell Industries has changed from year to year.
Is LyondellBasell Industries N.V. Growing?
Over the last three years LyondellBasell Industries N.V. has grown its earnings per share (EPS) by an average of 17% 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. Shareholders might be interested in this free visualization of analyst forecasts.
Has LyondellBasell Industries N.V. Been A Good Investment?
LyondellBasell Industries N.V. has served shareholders reasonably well, with a total return of 26% over three years. But they probably wouldn’t be so happy as to think the CEO should be paid more than is normal, for companies around this size.
We compared the total CEO remuneration paid by LyondellBasell Industries N.V., and compared it to remuneration at a group of other large 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. We also think investors are doing ok, over the same time period. So, considering the EPS growth we do not wish to criticize the level of CEO compensation, though we’d recommend further research on management. Shareholders may want to check for free if LyondellBasell Industries insiders are buying or selling shares.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity 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 firstname.lastname@example.org. 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.