We Think Some Shareholders May Hesitate To Increase BHP Group Limited's (ASX:BHP) CEO Compensation

Performance at BHP Group Limited (ASX:BHP) has been reasonably good and CEO Mike Henry has done a decent job of steering the company in the right direction. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 10 November 2022. However, some shareholders may still want to keep CEO compensation within reason.

See our latest analysis for BHP Group

Comparing BHP Group Limited's CEO Compensation With The Industry

Our data indicates that BHP Group Limited has a market capitalization of AU$199b, and total annual CEO compensation was reported as US$7.5m for the year to June 2022. That's mostly flat as compared to the prior year's compensation. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.7m.

In comparison with other companies in the industry with market capitalizations over AU$13b, the reported median total CEO compensation was US$3.8m. Accordingly, our analysis reveals that BHP Group Limited pays Mike Henry north of the industry median. Moreover, Mike Henry also holds AU$26m worth of BHP Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	US$1.7m	US$1.7m	23%
Other	US$5.8m	US$5.7m	77%
Total Compensation	US$7.5m	US$7.4m	100%

On an industry level, around 60% of total compensation represents salary and 40% is other remuneration. BHP Group pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at BHP Group Limited's Growth Numbers

BHP Group Limited has seen its earnings per share (EPS) increase by 34% a year over the past three years. Its revenue is up 14% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has BHP Group Limited Been A Good Investment?

We think that the total shareholder return of 51%, over three years, would leave most BHP Group Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 2 warning signs for BHP Group (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Important note: BHP Group is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.