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Westlake Chemical Corporation (NYSE:WLK) has not performed well recently and CEO Albert Chao will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 13 May 2021. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.
How Does Total Compensation For Albert Chao Compare With Other Companies In The Industry?
According to our data, Westlake Chemical Corporation has a market capitalization of US$13b, and paid its CEO total annual compensation worth US$11m over the year to December 2020. This means that the compensation hasn't changed much from last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.1m.
On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$12m. So it looks like Westlake Chemical compensates Albert Chao in line with the median for the industry. Furthermore, Albert Chao directly owns US$93m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, roughly 17% of total compensation represents salary and 83% is other remuneration. It's interesting to note that Westlake Chemical allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Westlake Chemical Corporation's Growth Numbers
Over the last three years, Westlake Chemical Corporation has shrunk its earnings per share by 33% per year. It saw its revenue drop 1.2% over the last year.
Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Westlake Chemical Corporation Been A Good Investment?
Since shareholders would have lost about 8.0% over three years, some Westlake Chemical Corporation investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 4 warning signs for Westlake Chemical you should be aware of, and 1 of them is a bit concerning.
Switching gears from Westlake Chemical, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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