Is CF Industries Holdings, Inc.’s (NYSE:CF) CEO Overpaid Relative To Its Peers?

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In 2014 Tony Will was appointed CEO of CF Industries Holdings, Inc. (NYSE:CF). First, this article will compare CEO compensation with compensation at other large companies. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for CF Industries Holdings

How Does Tony Will’s Compensation Compare With Similar Sized Companies?

Our data indicates that CF Industries Holdings, Inc. is worth US$10b, and total annual CEO compensation is US$7.8m. (This is based on the year to December 2018). That’s less than last year. While we always look at total compensation first, we note that the salary component is less, at US$1.2m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren’t that many of them.

A first glance this seems like a real positive for shareholders, since Tony Will is paid less than the average total compensation paid by other large companies. While this is a good thing, you’ll need to understand the business better before you can form an opinion.

You can see, below, how CEO compensation at CF Industries Holdings has changed over time.

NYSE:CF CEO Compensation, June 23rd 2019
NYSE:CF CEO Compensation, June 23rd 2019

Is CF Industries Holdings, Inc. Growing?

On average over the last three years, CF Industries Holdings, Inc. has grown earnings per share (EPS) by 40% each year (using a line of best fit). Its revenue is up 10% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. It could be important to check this free visual depiction of what analysts expect for the future.

Has CF Industries Holdings, Inc. Been A Good Investment?

Most shareholders would probably be pleased with CF Industries Holdings, Inc. for providing a total return of 104% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary…

It looks like CF Industries Holdings, Inc. pays its CEO less than the average at large companies. Since the business is growing, many would argue this suggests the pay is modest. The pleasing shareholder returns are the cherry on top; you might even consider that Tony Will deserves a raise!

It is relatively rare to see a modestly paid CEO when performance is so impressive. It would be even more positive if company insiders are buying shares. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling CF Industries Holdings (free visualization of insider trades).

If you want to buy a stock that is better than CF Industries Holdings, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.