In 2013 Andrew Mackenzie was appointed CEO of BHP Group (ASX:BHP). First, this article will compare CEO compensation with compensation at other large companies. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Andrew Mackenzie’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that BHP Group has a market cap of AU$184b, and is paying total annual CEO compensation of US$8.1m. (This figure is for the year to June 2018). While we always look at total compensation first, we note that the salary component is less, at US$1.7m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$3.6m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
As you can see, Andrew Mackenzie is paid more than the median CEO pay at large companies, in the same market. However, this does not necessarily mean BHP Group is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see a visual representation of the CEO compensation at BHP Group, below.
Is BHP Group Growing?
Over the last three years BHP Group has grown its earnings per share (EPS) by an average of 92% per year (using a line of best fit). In the last year, its revenue is up 17%.
This shows that the company has improved itself over the last few years. Good news for shareholders. It’s also good to see decent revenue growth in the last year, suggesting the business is healthy and growing.
Has BHP Group Been A Good Investment?
I think that the total shareholder return of 115%, over three years, would leave most BHP Group shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared total CEO remuneration at BHP Group with the amount paid at other large companies. We found that it pays well over the median amount paid in the benchmark group.
However we must not forget that the EPS growth has been very strong over three years. In addition, shareholders have done well over the same time period. Considering this fine result for shareholders, we daresay the CEO compensation might be apt. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling BHP Group (free visualization of insider trades).
If you want to buy a stock that is better than BHP Group, this free list of high return, low debt companies is a great place to look.
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