What We Learned About CVR Energy’s (NYSE:CVI) CEO Compensation

Dave Lamp has been the CEO of CVR Energy, Inc. (NYSE:CVI) since 2018, and this article will examine the executive’s compensation with respect to the overall performance of the company. This analysis will also assess whether CVR Energy pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for CVR Energy

How Does Total Compensation For Dave Lamp Compare With Other Companies In The Industry?

According to our data, CVR Energy, Inc. has a market capitalization of US$2.0b, and paid its CEO total annual compensation worth US$4.3m over the year to December 2019. That’s mostly flat as compared to the prior year’s compensation. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.0m.

For comparison, other companies in the same industry with market capitalizations ranging between US$1.0b and US$3.2b had a median total CEO compensation of US$8.8m. This suggests that Dave Lamp is paid below the industry median.

Component20192018Proportion (2019)
Salary US$1.0m US$1.0m 23%
Other US$3.3m US$3.4m 77%
Total CompensationUS$4.3m US$4.4m100%

On an industry level, roughly 19% of total compensation represents salary and 81% is other remuneration. CVR Energy is paying a higher share of its remuneration through a salary in comparison to the overall industry. If non-salary compensation dominates total pay, it’s an indicator that the executive’s salary is tied to company performance.

ceo-compensation
NYSE:CVI CEO Compensation July 25th 2020

CVR Energy, Inc.’s Growth

Over the past three years, CVR Energy, Inc. has seen its earnings per share (EPS) grow by 38% per year. Its revenue is down 15% over the previous year.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. Looking ahead, you might want to check this free visual report on analyst forecasts for the company’s future earnings..

Has CVR Energy, Inc. Been A Good Investment?

CVR Energy, Inc. has generated a total shareholder return of 30% over three years, so most shareholders would be reasonably content. 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.

To Conclude…

As we touched on above, CVR Energy, Inc. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. At the same time, earnings growth has been exceptional over the past three years. Unfortunately, although shareholder returns are growing, they haven’t impressed us as much in comparison, over the same period. We would wish for better returns (whether dividends or capital gains) but we do admire the solid EPS growth on show here. As a result of these considerations, CEO compensation seems quite appropriate.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which can’t be ignored) in CVR Energy we think you should know about.

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.

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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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