Yahoo Finance We Discuss Why AdvanSix Inc.'s (NYSE:ASIX) CEO Compensation May Be Closely Reviewed
Key Insights
AdvanSix to hold its Annual General Meeting on 13th of June
Salary of US$1.01m is part of CEO Erin Kane's total remuneration
The total compensation is similar to the average for the industry
AdvanSix's EPS declined by 67% over the past three years while total shareholder loss over the past three years was 19%
The results at AdvanSix Inc. (NYSE:ASIX) have been quite disappointing recently and CEO Erin Kane bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 13th of June. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.
Check out our latest analysis for AdvanSix
How Does Total Compensation For Erin Kane Compare With Other Companies In The Industry?
According to our data, AdvanSix Inc. has a market capitalization of US$637m, and paid its CEO total annual compensation worth US$4.7m over the year to December 2023. Notably, that's a decrease of 11% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.0m.
On examining similar-sized companies in the American Chemicals 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. This suggests that AdvanSix remunerates its CEO largely in line with the industry average. Moreover, Erin Kane also holds US$11m worth of AdvanSix 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$975k | 21% |
Other | US$3.7m | US$4.3m | 79% |
Total Compensation | US$4.7m | US$5.3m | 100% |
Speaking on an industry level, nearly 19% of total compensation represents salary, while the remainder of 81% is other remuneration. According to our research, AdvanSix has allocated a higher percentage of pay to salary in comparison to the wider industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
AdvanSix Inc.'s Growth
Over the last three years, AdvanSix Inc. has shrunk its earnings per share by 67% per year. Its revenue is down 21% over the previous year.
Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has AdvanSix Inc. Been A Good Investment?
Since shareholders would have lost about 19% over three years, some AdvanSix Inc. investors would surely be feeling negative emotions. 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, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 2 warning signs for AdvanSix you should be aware of, and 1 of them can't be ignored.
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. 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.
