Shareholders Will Probably Hold Off On Increasing Albemarle Corporation's (NYSE:ALB) CEO Compensation For The Time Being

Key Insights

• Albemarle's Annual General Meeting to take place on 7th of May
• Salary of US$1.33m is part of CEO Jerry Masters's total remuneration
• The total compensation is similar to the average for the industry
• Albemarle's EPS grew by 56% over the past three years while total shareholder loss over the past three years was 24%

In the past three years, the share price of Albemarle Corporation (NYSE:ALB) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 7th of May. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Albemarle

How Does Total Compensation For Jerry Masters Compare With Other Companies In The Industry?

According to our data, Albemarle Corporation has a market capitalization of US$14b, and paid its CEO total annual compensation worth US$14m over the year to December 2023. We note that's an increase of 30% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.3m.

In comparison with other companies in the American Chemicals industry with market capitalizations over US$8.0b, the reported median total CEO compensation was US$14m. From this we gather that Jerry Masters is paid around the median for CEOs in the industry. Moreover, Jerry Masters also holds US$9.2m worth of Albemarle stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	US$1.3m	US$1.1m	9%
Other	US$13m	US$10.0m	91%
Total Compensation	US$14m	US$11m	100%

On an industry level, roughly 19% of total compensation represents salary and 81% is other remuneration. Albemarle sets aside a smaller share of compensation for 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.

Albemarle Corporation's Growth

Over the past three years, Albemarle Corporation has seen its earnings per share (EPS) grow by 56% per year. Its revenue is up 31% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Albemarle Corporation Been A Good Investment?

Given the total shareholder loss of 24% over three years, many shareholders in Albemarle Corporation are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 2 warning signs for Albemarle (1 is concerning!) that you should be aware of before investing here.

Switching gears from Albemarle, 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.