We Discuss Why Orion Engineered Carbons S.A.'s (NYSE:OEC) CEO Will Find It Hard To Get A Pay Rise From Shareholders This Year

The underwhelming performance at Orion Engineered Carbons S.A. (NYSE:OEC) recently has probably not pleased shareholders. The next AGM coming up on 24 June 2021 will be a chance for shareholders to have their concerns addressed by the board, challenge management on company strategy and vote on resolutions such as executive remuneration, which may help change the company's future prospects. From our analysis below, we think CEO compensation looks appropriate for now.

View our latest analysis for Orion Engineered Carbons

Comparing Orion Engineered Carbons S.A.'s CEO Compensation With the industry

At the time of writing, our data shows that Orion Engineered Carbons S.A. has a market capitalization of US$1.1b, and reported total annual CEO compensation of US$2.9m for the year to December 2020. That's a notable decrease of 23% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$613k.

On examining similar-sized companies in the industry with market capitalizations between US$400m and US$1.6b, we discovered that the median CEO total compensation of that group was US$4.2m. Accordingly, Orion Engineered Carbons pays its CEO under the industry median. Moreover, Corning Painter also holds US$6.1m worth of Orion Engineered Carbons stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 17% of total compensation represents salary and 83% is other remuneration. Orion Engineered Carbons pays out 21% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Orion Engineered Carbons S.A.'s Growth

Over the last three years, Orion Engineered Carbons S.A. has shrunk its earnings per share by 32% per year. It saw its revenue drop 19% over the last 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. 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 Orion Engineered Carbons S.A. Been A Good Investment?

The return of -40% over three years would not have pleased Orion Engineered Carbons S.A. shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 2 warning signs for Orion Engineered Carbons you should be aware of, and 1 of them is potentially serious.

Switching gears from Orion Engineered Carbons, 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. 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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