Most Shareholders Will Probably Agree With LyondellBasell Industries N.V.'s (NYSE:LYB) CEO Compensation

The share price of LyondellBasell Industries N.V. (NYSE:LYB) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 28 May 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

View our latest analysis for LyondellBasell Industries

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

Our data indicates that LyondellBasell Industries N.V. has a market capitalization of US$37b, and total annual CEO compensation was reported as US$16m for the year to December 2020. This means that the compensation hasn't changed much from last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued 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$12m. So it looks like LyondellBasell Industries compensates Bob Patel in line with the median for the industry. What's more, Bob Patel holds US$32m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 17% of total compensation represents salary, while the remainder of 83% is other remuneration. LyondellBasell Industries 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.

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

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

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 LyondellBasell Industries N.V. Been A Good Investment?

LyondellBasell Industries N.V. has served shareholders reasonably well, with a total return of 12% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

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.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 4 warning signs for LyondellBasell Industries you should be aware of, and 1 of them is potentially serious.

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. 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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