Does Schnitzer Steel Industries, Inc.’s (NASDAQ:SCHN) CEO Salary Reflect Performance?

Tamara Adler Lundgren became the CEO of Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) in 2008. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Schnitzer Steel Industries

How Does Tamara Adler Lundgren’s Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Schnitzer Steel Industries, Inc. has a market cap of US$324m, and reported total annual CEO compensation of US$5.9m for the year to August 2019. While we always look at total compensation first, we note that the salary component is less, at US$1.1m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined companies with market caps from US$200m to US$800m, and discovered that the median CEO total compensation of that group was US$2.3m.

Pay mix tells us a lot about how a company functions versus the wider industry, and it’s no different in the case of Schnitzer Steel Industries. On an industry level, roughly 36% of total compensation represents salary and 64% is other remuneration. Readers will want to know that Schnitzer Steel Industries pays a modest slice of remuneration through salary, as compared to the wider sector.

Thus we can conclude that Tamara Adler Lundgren receives more in total compensation than the median of a group of companies in the same market, and of similar size to Schnitzer Steel Industries, Inc.. However, this doesn’t necessarily mean the pay is too high. 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, below, how CEO compensation at Schnitzer Steel Industries has changed over time.

NasdaqGS:SCHN CEO Compensation, March 23rd 2020
NasdaqGS:SCHN CEO Compensation, March 23rd 2020

Is Schnitzer Steel Industries, Inc. Growing?

On average over the last three years, Schnitzer Steel Industries, Inc. has grown earnings per share (EPS) by 30% each year (using a line of best fit). Its revenue is down 19% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. It could be important to check this free visual depiction of what analysts expect for the future.

Has Schnitzer Steel Industries, Inc. Been A Good Investment?

Given the total loss of 36% over three years, many shareholders in Schnitzer Steel Industries, Inc. are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

We compared total CEO remuneration at Schnitzer Steel Industries, Inc. with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. However, the returns to investors are far less impressive, over the same period. While EPS is positive, we’d say shareholders would want better returns before the CEO is paid much more. CEO compensation is an important area to keep your eyes on, but we’ve also identified 3 warning signs for Schnitzer Steel Industries (1 doesn’t sit too well with us!) that you should be aware of before investing here.

If you want to buy a stock that is better than Schnitzer Steel Industries, this free list of high return, low debt companies is a great place to look.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.