Key Insights

• NL Industries will host its Annual General Meeting on 16th of May
• CEO Courtney Riley's total compensation includes salary of US$1.40m
• The total compensation is 63% less than the average for the industry
• NL Industries' total shareholder return over the past three years was 31% while its EPS was down 25% over the past three years

The performance at NL Industries, Inc. (NYSE:NL) has been rather lacklustre of late and shareholders may be wondering what CEO Courtney Riley is planning to do about this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 16th of May. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

How Does Total Compensation For Courtney Riley Compare With Other Companies In The Industry?

According to our data, NL Industries, Inc. has a market capitalization of US$423m, and paid its CEO total annual compensation worth US$1.4m over the year to December 2023. That's a notable increase of 30% on last year. Notably, the salary of US$1.4m is the entirety of the CEO compensation.

On comparing similar companies from the American Commercial Services industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$3.8m. That is to say, Courtney Riley is paid under the industry median.

Speaking on an industry level, nearly 22% of total compensation represents salary, while the remainder of 78% is other remuneration. Speaking on a company level, NL Industries prefers to tread along a traditional path, disbursing all compensation through a salary. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at NL Industries, Inc.'s Growth Numbers

Over the last three years, NL Industries, Inc. has shrunk its earnings per share by 25% per year. In the last year, its revenue is down 4.6%.

Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has NL Industries, Inc. Been A Good Investment?

NL Industries, Inc. has served shareholders reasonably well, with a total return of 31% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

NL Industries pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. While it's true that shareholders have seen decent returns, it's hard to overlook the lack of earnings growth and this makes us wonder if the current returns can continue. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 2 warning signs for NL Industries that investors should look into moving forward.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.