We Think Shareholders May Want To Consider A Review Of NL Industries, Inc.'s (NYSE:NL) CEO Compensation Package

NL Industries, Inc. (NYSE:NL) has not performed well recently and CEO Robert Graham will probably need to up their game. At the upcoming AGM on 20 May 2021, shareholders can hear from the board including their plans for turning around performance. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for NL Industries

How Does Total Compensation For Robert Graham Compare With Other Companies In The Industry?

At the time of writing, our data shows that NL Industries, Inc. has a market capitalization of US$357m, and reported total annual CEO compensation of US$6.7m for the year to December 2020. Notably, that's an increase of 18% over the year before. Notably, the salary of US$6.7m is the entirety of the CEO compensation.

On examining similar-sized companies in the industry with market capitalizations between US$200m and US$800m, we discovered that the median CEO total compensation of that group was US$2.4m. Hence, we can conclude that Robert Graham is remunerated higher than the industry median.

Component	2020	2019	Proportion (2020)
Salary	US$6.7m	US$5.7m	100%
Other	-	-	-
Total Compensation	US$6.7m	US$5.7m	100%

On an industry level, roughly 23% of total compensation represents salary and 77% is other remuneration. At the company level, NL Industries pays Robert Graham solely through a salary, preferring to go down a conventional route. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at NL Industries, Inc.'s Growth Numbers

Over the last three years, NL Industries, Inc. has shrunk its earnings per share by 40% per year. In the last year, its revenue is down 5.8%.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has NL Industries, Inc. Been A Good Investment?

Given the total shareholder loss of 19% over three years, many shareholders in NL Industries, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

NL Industries rewards its CEO solely through a salary, ignoring non-salary benefits completely. Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 3 warning signs for NL Industries that investors should think about before committing capital to this stock.

Switching gears from NL Industries, 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.

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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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