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This article will reflect on the compensation paid to Teddy Gottwald who has served as CEO of NewMarket Corporation (NYSE:NEU) since 2004. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for NewMarket.
Comparing NewMarket Corporation's CEO Compensation With the industry
At the time of writing, our data shows that NewMarket Corporation has a market capitalization of US$4.0b, and reported total annual CEO compensation of US$3.2m for the year to December 2019. We note that's an increase of 50% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.1m.
On comparing similar companies from the same industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$5.7m. This suggests that Teddy Gottwald is paid below the industry median. Furthermore, Teddy Gottwald directly owns US$205m worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 19% of total compensation represents salary, while the remainder of 81% is other remuneration. NewMarket pays out 34% of remuneration in the form of a salary, significantly higher than the industry average. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
NewMarket Corporation's Growth
Over the last three years, NewMarket Corporation has not seen its earnings per share change much, though they have deteriorated slightly. It saw its revenue drop 6.4% over the last year.
The lack of EPS growth is certainly unimpressive. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has NewMarket Corporation Been A Good Investment?
With a three year total loss of 7.9% for the shareholders, NewMarket Corporation would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we noted earlier, NewMarket pays its CEO lower than the norm for similar-sized companies belonging to the same industry. EPS growth has failed to impress us, and the same can be said about shareholder returns. It's tough to say that Teddy is earning a very high compensation, but shareholders will likely want to see healthier investor returns before agreeing that a raise is in order.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for NewMarket that you should be aware of before investing.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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