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Is Valvoline Inc.'s (NYSE:VVV) CEO Paid Enough Relative To Peers?

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Simply Wall St
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Sam Mitchell has been the CEO of Valvoline Inc. (NYSE:VVV) since 2016. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Valvoline

How Does Sam Mitchell's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Valvoline Inc. has a market cap of US$4.0b, and reported total annual CEO compensation of US$4.4m for the year to September 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$950k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. 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$5.1m.

That means Sam Mitchell receives fairly typical remuneration for the CEO of a company that size. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.

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

NYSE:VVV CEO Compensation, December 16th 2019
NYSE:VVV CEO Compensation, December 16th 2019

Is Valvoline Inc. Growing?

Valvoline Inc. has reduced its earnings per share by an average of 16% a year, over the last three years (measured with a line of best fit). Its revenue is up 4.6% over last year.

Sadly for shareholders, earnings per share are actually down, over three years. The modest increase in revenue in the last year isn't enough to make me overlook the disappointing change in earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has Valvoline Inc. Been A Good Investment?

Valvoline Inc. has generated a total shareholder return of 8.2% over three years, so most shareholders wouldn't be too disappointed. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Remuneration for Sam Mitchell is close enough to the median pay for a CEO of a similar sized company .

We feel that earnings per share have been a bit disappointing, but and we don't think the total returns are amazing. We're not saying the CEO pay is too generous, but we'd venture the company should look to improve its business metrics (and share price) before paying any more. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Valvoline (free visualization of insider trades).

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.

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.

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. Thank you for reading.