Linda Massman became the CEO of Clearwater Paper Corporation (NYSE:CLW) in 2013. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Linda Massman’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Clearwater Paper Corporation has a market cap of US$269m, and is paying total annual CEO compensation of US$4.0m. (This figure is for the year to December 2018). While we always look at total compensation first, we note that the salary component is less, at US$925k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$100m to US$400m. The median total CEO compensation was US$1.2m.
As you can see, Linda Massman is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Clearwater Paper Corporation 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.
The graphic below shows how CEO compensation at Clearwater Paper has changed from year to year.
Is Clearwater Paper Corporation Growing?
On average over the last three years, Clearwater Paper Corporation has shrunk earnings per share by 67% each year (measured with a line of best fit). In the last year, its revenue changed by just 0.2%.
Sadly for shareholders, earnings per share are actually down, over three years. And the flat revenue hardly impresses. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO.
Has Clearwater Paper Corporation Been A Good Investment?
With a three year total loss of 74%, Clearwater Paper Corporation would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
We compared the total CEO remuneration paid by Clearwater Paper Corporation, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.We think many shareholders would be underwhelmed with the business growth over the last three years.
Just as bad, share price gains for investors have failed to materialize, over the same period. In our opinion the CEO might be paid too generously! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Clearwater Paper.
Important note: Clearwater Paper may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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