Is Glencore plc's (LON:GLEN) CEO Pay Justified?

Ivan Glasenberg has been the CEO of Glencore plc (LON:GLEN) since 2002. This analysis aims first to contrast CEO compensation with other large companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Glencore

How Does Ivan Glasenberg's Compensation Compare With Similar Sized Companies?

Our data indicates that Glencore plc is worth UK£19b, and total annual CEO compensation was reported as US$1.5m for the year to December 2019. It is worth noting that the CEO compensation consists almost entirely of the salary, worth US$1.4m. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO total compensation was US$5.0m. Once you start looking at very large companies, you need to take a broader range, because there simply aren't that many of them.

Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Glencore stands. On a sector level, around 75% of total compensation represents salary and 25% is other remuneration. Glencore pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay.

At first glance this seems like a real positive for shareholders, since Ivan Glasenberg is paid less than the average total compensation paid by other large companies. However, before we heap on the praise, we should delve deeper to understand business performance. The graphic below shows how CEO compensation at Glencore has changed from year to year.

Is Glencore plc Growing?

On average over the last three years, Glencore plc has shrunk earnings per share by 13% each year (measured with a line of best fit). In the last year, its revenue is down 2.5%.

Sadly for shareholders, earnings per share are actually down, over three years. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has Glencore plc Been A Good Investment?

Since shareholders would have lost about 47% over three years, some Glencore plc shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

It appears that Glencore plc remunerates its CEO below most large companies.

Ivan Glasenberg is paid less than CEOs of most large companies, but the company isn't growing and total shareholder returns have been disappointing. We would not call the pay too generous, but nor would we claim the CEO is underpaid, given lacklustre business performance. Shifting gears from CEO pay for a second, we've picked out 2 warning signs for Glencore that investors should be aware of in a dynamic business environment.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

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