A Look At LyondellBasell Industries' (NYSE:LYB) CEO Remuneration

Simply Wall St
October 19, 2020

This article will reflect on the compensation paid to Bob Patel who has served as CEO of LyondellBasell Industries N.V. (NYSE:LYB) since 2015. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for LyondellBasell Industries.

Check out our latest analysis for LyondellBasell Industries

How Does Total Compensation For Bob Patel Compare With Other Companies In The Industry?

According to our data, LyondellBasell Industries N.V. has a market capitalization of US$26b, and paid its CEO total annual compensation worth US$16m over the year to December 2019. Notably, that's a decrease of 12% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.6m.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$15m. So it looks like LyondellBasell Industries compensates Bob Patel in line with the median for the industry. What's more, Bob Patel holds US$21m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20192018Proportion (2019)
Salary US$1.6m US$1.6m 10%
Other US$14m US$17m 90%
Total CompensationUS$16m US$18m100%

Speaking on an industry level, nearly 19% of total compensation represents salary, while the remainder of 81% is other remuneration. LyondellBasell Industries sets aside a smaller share of compensation for 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.

NYSE:LYB CEO Compensation October 19th 2020

A Look at LyondellBasell Industries N.V.'s Growth Numbers

LyondellBasell Industries N.V. has reduced its earnings per share by 12% a year over the last three years. Its revenue is down 19% over the previous year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has LyondellBasell Industries N.V. Been A Good Investment?

With a three year total loss of 10% for the shareholders, LyondellBasell Industries N.V. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we touched on above, LyondellBasell Industries N.V. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for LyondellBasell Industries that investors should think about before committing capital to this stock.

Important note: LyondellBasell Industries 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. 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.
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