Is NewMarket Corporation’s (NYSE:NEU) CEO Overpaid Relative To Its Peers?

Teddy Gottwald became the CEO of NewMarket Corporation (NYSE:NEU) in 2004. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for NewMarket

How Does Teddy Gottwald’s Compensation Compare With Similar Sized Companies?

Our data indicates that NewMarket Corporation is worth US$5.0b, and total annual CEO compensation is US$2.1m. (This number is for the twelve months until December 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$1.1m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$4.0b to US$12b. The median total CEO compensation was US$6.8m.

A first glance this seems like a real positive for shareholders, since Teddy Gottwald is paid less than the average total compensation paid by similar sized companies. While this is a good thing, you’ll need to understand the business better before you can form an opinion.

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

NYSE:NEU CEO Compensation, August 2nd 2019
NYSE:NEU CEO Compensation, August 2nd 2019

Is NewMarket Corporation Growing?

NewMarket Corporation has reduced its earnings per share by an average of 2.2% a year, over the last three years (measured with a line of best fit). Its revenue is down -4.1% over last year.

Unfortunately there is a complete lack of earnings per share improvement, over three years. 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.

Has NewMarket Corporation Been A Good Investment?

NewMarket Corporation has generated a total shareholder return of 8.5% over three years, so most shareholders wouldn’t be too disappointed. 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.

In Summary…

It looks like NewMarket Corporation pays its CEO less than similar sized companies.

Shareholders should note that compensation for Teddy Gottwald is under the median of a group of similar sized companies. However, the earnings per share are not moving in the right direction, and the returns to shareholders could have been better. So while shareholders shouldn’t be overly concerned about CEO compensation, we suspect most would prefer see improved performance, before increasing pay. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling NewMarket (free visualization of insider trades).

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.