We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Ashland Inc.'s (NYSE:ASH) CEO For Now

Key Insights

• Ashland's Annual General Meeting to take place on 23rd of January
• Total pay for CEO Guillermo Novo includes US$1.11m salary
• Total compensation is 32% above industry average
• Over the past three years, Ashland's EPS grew by 92% and over the past three years, the total loss to shareholders 5.2%

In the past three years, shareholders of Ashland Inc. (NYSE:ASH) have seen a loss on their investment. 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 23rd 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 think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for Ashland

Comparing Ashland Inc.'s CEO Compensation With The Industry

According to our data, Ashland Inc. has a market capitalization of US$4.1b, and paid its CEO total annual compensation worth US$7.0m over the year to September 2023. We note that's a decrease of 25% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.1m.

On comparing similar companies from the American Chemicals industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$5.3m. Hence, we can conclude that Guillermo Novo is remunerated higher than the industry median. Moreover, Guillermo Novo also holds US$8.6m worth of Ashland 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$1.1m	US$1.1m	16%
Other	US$5.8m	US$8.2m	84%
Total Compensation	US$7.0m	US$9.3m	100%

On an industry level, around 19% of total compensation represents salary and 81% is other remuneration. In Ashland's case, non-salary compensation represents a greater slice of total remuneration, in comparison 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 Ashland Inc.'s Growth Numbers

Over the past three years, Ashland Inc. has seen its earnings per share (EPS) grow by 92% per year. In the last year, its revenue is down 8.4%.

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. 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 Ashland Inc. Been A Good Investment?

Since shareholders would have lost about 5.2% over three years, some Ashland Inc. investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

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 2 warning signs for Ashland that investors should think about before committing capital to this stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.