We Think Some Shareholders May Hesitate To Increase Air Products and Chemicals, Inc.'s (NYSE:APD) CEO Compensation

Key Insights

• Air Products and Chemicals will host its Annual General Meeting on 25th of January
• CEO Seifi Ghasemi's total compensation includes salary of US$1.35m
• Total compensation is 55% above industry average
• Over the past three years, Air Products and Chemicals' EPS grew by 6.3% and over the past three years, the total loss to shareholders 1.5%

As many shareholders of Air Products and Chemicals, Inc. (NYSE:APD) will be aware, they have not made a gain on their investment in the past three years. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 25th of January could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Air Products and Chemicals

How Does Total Compensation For Seifi Ghasemi Compare With Other Companies In The Industry?

At the time of writing, our data shows that Air Products and Chemicals, Inc. has a market capitalization of US$58b, and reported total annual CEO compensation of US$22m for the year to September 2023. That's a notable increase of 19% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.4m.

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. This suggests that Seifi Ghasemi is paid more than the median for the industry. Furthermore, Seifi Ghasemi directly owns US$177m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$1.4m	US$1.4m	6%
Other	US$21m	US$17m	94%
Total Compensation	US$22m	US$18m	100%

Talking in terms of the industry, salary represented approximately 19% of total compensation out of all the companies we analyzed, while other remuneration made up 81% of the pie. Air Products and Chemicals pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Air Products and Chemicals, Inc.'s Growth Numbers

Over the past three years, Air Products and Chemicals, Inc. has seen its earnings per share (EPS) grow by 6.3% per year. Revenue was pretty flat on last year.

We would prefer it if there was revenue growth, but it is good to see a modest EPS growth at least. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Air Products and Chemicals, Inc. Been A Good Investment?

With a three year total loss of 1.5% for the shareholders, Air Products and Chemicals, Inc. would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

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. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. 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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for Air Products and Chemicals that investors should be aware of in a dynamic business environment.

Important note: Air Products and Chemicals is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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.