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Teddy Gottwald has been the CEO of NewMarket Corporation (NYSE:NEU) since 2004. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Teddy Gottwald’s Compensation Compare With Similar Sized Companies?
Our data indicates that NewMarket Corporation is worth US$4.9b, and total annual CEO compensation is US$3.1m. (This number is for the twelve months until December 2017). While we always look at total compensation first, we note that the salary component is less, at US$1.0m. We looked at a group of companies with market capitalizations from US$4.0b to US$12b, and the median CEO compensation was US$6.2m.
Most shareholders would consider it a positive that Teddy Gottwald takes less compensation than the CEOs of most similar size companies, leaving more for shareholders. While this is a good thing, you’ll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at NewMarket has changed from year to year.
Is NewMarket Corporation Growing?
NewMarket Corporation has reduced its earnings per share by an average of 7.5% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 4.2% over the last year.
Sadly for shareholders, earnings per share are actually down, over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. We don’t have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has NewMarket Corporation Been A Good Investment?
NewMarket Corporation has served shareholders reasonably well, with a total return of 25% over three years. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.
It appears that NewMarket Corporation remunerates its CEO below most similar sized companies.
Shareholders should note that compensation for Teddy Gottwald is under the median of a group of similar sized companies. However, the earnings per share are not moving in the right direction, and the returns to shareholders could have been better. There is room for improved company performance, but we don’t see the CEO pay as a big issue here. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at NewMarket.
If you want to buy a stock that is better than NewMarket, 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 email@example.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.