Dow Inc.'s (NYSE:DOW) CEO Compensation Is Looking A Bit Stretched At The Moment

Key Insights

• Dow will host its Annual General Meeting on 11th of April
• Salary of US$1.69m is part of CEO Jim Fitterling's total remuneration
• The overall pay is 50% above the industry average
• Dow's EPS declined by 21% over the past three years while total shareholder return over the past three years was 9.8%

Despite Dow Inc.'s (NYSE:DOW) share price growing positively in the past few years, the per-share earnings growth has not grown to investors' expectations, suggesting that there could be other factors at play driving the share price. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 11th of April. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

See our latest analysis for Dow

How Does Total Compensation For Jim Fitterling Compare With Other Companies In The Industry?

According to our data, Dow Inc. has a market capitalization of US$42b, and paid its CEO total annual compensation worth US$21m over the year to December 2023. That's a fairly small increase of 7.0% over the previous year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.7m.

For comparison, other companies in the American Chemicals industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$14m. This suggests that Jim Fitterling is paid more than the median for the industry. What's more, Jim Fitterling holds US$17m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$1.7m	US$1.6m	8%
Other	US$19m	US$18m	92%
Total Compensation	US$21m	US$19m	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. Dow sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Dow Inc.'s Growth

Over the last three years, Dow Inc. has shrunk its earnings per share by 21% per year. Its revenue is down 22% over the previous year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Dow Inc. Been A Good Investment?

Dow Inc. has not done too badly by shareholders, with a total return of 9.8%, over three years. It would be nice to see that metric improve in the future. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.

In Summary...

Shareholder returns, while positive, should be looked at along with earnings, which have not grown at all recently. This makes us think the share price momentum may slow in the future. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

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 4 warning signs for Dow that you should be aware of before investing.

Switching gears from Dow, 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.