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Should You Worry About Phillips 66's (NYSE:PSX) CEO Salary Level?

Simply Wall St

Greg Garland has been the CEO of Phillips 66 (NYSE:PSX) since 2012. First, this article will compare CEO compensation with compensation at other large companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Phillips 66

How Does Greg Garland's Compensation Compare With Similar Sized Companies?

Our data indicates that Phillips 66 is worth US$52b, and total annual CEO compensation was reported as US$19m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$1.7m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. There aren't very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.

As you can see, Greg Garland is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean Phillips 66 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.

You can see a visual representation of the CEO compensation at Phillips 66, below.

NYSE:PSX CEO Compensation, October 29th 2019

Is Phillips 66 Growing?

On average over the last three years, Phillips 66 has grown earnings per share (EPS) by 43% each year (using a line of best fit). In the last year, its revenue is down 1.3%.

This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. Shareholders might be interested in this free visualization of analyst forecasts.

Has Phillips 66 Been A Good Investment?

I think that the total shareholder return of 61%, over three years, would leave most Phillips 66 shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

We compared total CEO remuneration at Phillips 66 with the amount paid at other large companies. We found that it pays well over the median amount paid in the benchmark group.

However, the earnings per share growth over three years is certainly impressive. On top of that, in the same period, returns to shareholders have been great. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. Shareholders may want to check for free if Phillips 66 insiders are buying or selling shares.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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 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. Thank you for reading.