Most Shareholders Will Probably Find That The CEO Compensation For Element Solutions Inc (NYSE:ESI) Is Reasonable

Key Insights

• Element Solutions will host its Annual General Meeting on 4th of June
• CEO Ben Gliklich's total compensation includes salary of US$1.00m
• Total compensation is similar to the industry average
• Element Solutions' EPS declined by 4.3% over the past three years while total shareholder return over the past three years was 5.6%

The share price of Element Solutions Inc (NYSE:ESI) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 4th of June. 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. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

View our latest analysis for Element Solutions

Comparing Element Solutions Inc's CEO Compensation With The Industry

Our data indicates that Element Solutions Inc has a market capitalization of US$5.9b, and total annual CEO compensation was reported as US$4.8m for the year to December 2023. That's slightly lower by 5.6% over the previous year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.0m.

On examining similar-sized companies in the American Chemicals industry with market capitalizations between US$4.0b and US$12b, we discovered that the median CEO total compensation of that group was US$6.6m. From this we gather that Ben Gliklich is paid around the median for CEOs in the industry. What's more, Ben Gliklich holds US$18m 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$1.0m	US$969k	21%
Other	US$3.8m	US$4.1m	79%
Total Compensation	US$4.8m	US$5.1m	100%

On an industry level, roughly 19% of total compensation represents salary and 81% is other remuneration. Element Solutions is paying a higher share of its remuneration through a 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.

A Look at Element Solutions Inc's Growth Numbers

Element Solutions Inc has reduced its earnings per share by 4.3% a year over the last three years. Its revenue is down 4.5% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. 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 Element Solutions Inc Been A Good Investment?

With a total shareholder return of 5.6% over three years, Element Solutions Inc has done okay by shareholders, but there's always room for improvement. Accordingly, a proposal to increase CEO remuneration without seeing an improvement in shareholder returns might not be met favorably by most shareholders.

To Conclude...

While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 2 warning signs for Element Solutions (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the 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.