Yahoo Finance We Think Shareholders Are Less Likely To Approve A Pay Rise For Eastman Chemical Company's (NYSE:EMN) CEO For Now
Key Insights
Eastman Chemical to hold its Annual General Meeting on 2nd of May
Salary of US$1.36m is part of CEO Mark Costa's total remuneration
The overall pay is comparable to the industry average
Eastman Chemical's three-year loss to shareholders was 9.0% while its EPS grew by 29% over the past three years
As many shareholders of Eastman Chemical Company (NYSE:EMN) will be aware, they have not made a gain on their investment in the past three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 2nd of May could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
Check out our latest analysis for Eastman Chemical
How Does Total Compensation For Mark Costa Compare With Other Companies In The Industry?
According to our data, Eastman Chemical Company has a market capitalization of US$11b, and paid its CEO total annual compensation worth US$18m over the year to December 2023. That's just a smallish increase of 3.1% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.4m.
For comparison, other companies in the American Chemicals industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$14m. From this we gather that Mark Costa is paid around the median for CEOs in the industry. Moreover, Mark Costa also holds US$38m worth of Eastman Chemical 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$1.4m | US$1.3m | 8% |
Other | US$16m | US$16m | 92% |
Total Compensation | US$18m | US$17m | 100% |
Talking in terms of the industry, salary represented approximately 19% of total compensation out of all the companies we analyzed, while other remuneration made up 81% of the pie. In Eastman Chemical's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Eastman Chemical Company's Growth
Eastman Chemical Company has seen its earnings per share (EPS) increase by 29% a year over the past three years. In the last year, its revenue is down 13%.
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. 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 Eastman Chemical Company Been A Good Investment?
With a three year total loss of 9.0% for the shareholders, Eastman Chemical Company would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.
To Conclude...
Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 3 warning signs for Eastman Chemical that investors should be aware of in a dynamic business environment.
Important note: Eastman Chemical 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.
