Here's Why Shareholders May Want To Be Cautious With Increasing National Fuel Gas Company's (NYSE:NFG) CEO Pay Packet

Key Insights

• National Fuel Gas to hold its Annual General Meeting on 8th of March
• Total pay for CEO Dave Bauer includes US$1.03m salary
• Total compensation is 120% above industry average
• National Fuel Gas' total shareholder return over the past three years was 9.8% while its EPS grew by 44% over the past three years

Performance at National Fuel Gas Company (NYSE:NFG) has been reasonably good and CEO Dave Bauer has done a decent job of steering the company in the right direction. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 8th of March. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

Check out our latest analysis for National Fuel Gas

How Does Total Compensation For Dave Bauer Compare With Other Companies In The Industry?

Our data indicates that National Fuel Gas Company has a market capitalization of US$4.5b, and total annual CEO compensation was reported as US$7.8m for the year to September 2023. That's a notable increase of 20% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.0m.

On comparing similar companies from the American Gas Utilities industry with market caps ranging from US$2.0b to US$6.4b, we found that the median CEO total compensation was US$3.5m. Hence, we can conclude that Dave Bauer is remunerated higher than the industry median. Moreover, Dave Bauer also holds US$4.3m worth of National Fuel Gas stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	US$1.0m	US$973k	13%
Other	US$6.7m	US$5.5m	87%
Total Compensation	US$7.8m	US$6.5m	100%

On an industry level, around 20% of total compensation represents salary and 80% is other remuneration. National Fuel Gas 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.

National Fuel Gas Company's Growth

National Fuel Gas Company's earnings per share (EPS) grew 44% per year over the last three years. Its revenue is down 11% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 National Fuel Gas Company Been A Good Investment?

National Fuel Gas Company has generated a total shareholder return of 9.8% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

In Summary...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for National Fuel Gas that investors should look into moving forward.

Important note: National Fuel Gas 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. 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.