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

Key Insights

• BHP Group's Annual General Meeting to take place on 31st of October
• Total pay for CEO Mike Henry includes US$1.74m salary
• The overall pay is 87% above the industry average
• Over the past three years, BHP Group's EPS grew by 18% and over the past three years, the total shareholder return was 81%

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 31st of October. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

View our latest analysis for BHP Group

How Does Total Compensation For Mike Henry Compare With Other Companies In The Industry?

According to our data, BHP Group Limited has a market capitalization of AU$221b, and paid its CEO total annual compensation worth US$7.5m over the year to June 2023. That is, the compensation was roughly the same as last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.7m.

For comparison, other companies in the Australian Metals and Mining industry with market capitalizations above AU$13b, reported a median total CEO compensation of US$4.0m. This suggests that Mike Henry is paid more than the median for the industry. What's more, Mike Henry holds AU$35m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$1.7m	US$1.7m	23%
Other	US$5.7m	US$5.8m	77%
Total Compensation	US$7.5m	US$7.5m	100%

Speaking on an industry level, nearly 62% of total compensation represents salary, while the remainder of 38% is other remuneration. In BHP Group's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

BHP Group Limited's Growth

BHP Group Limited's earnings per share (EPS) grew 18% per year over the last three years. Its revenue is down 17% over the previous year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has BHP Group Limited Been A Good Investment?

Most shareholders would probably be pleased with BHP Group Limited for providing a total return of 81% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 2 warning signs (and 1 which is potentially serious) in BHP Group we think you should know about.

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

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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.