Stock Analysis

Does BlueScope Steel's (ASX:BSL) CEO Salary Compare Well With The Performance Of The Company?

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ASX:BSL
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Mark Vassella has been the CEO of BlueScope Steel Limited (ASX:BSL) since 2018, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for BlueScope Steel.

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Comparing BlueScope Steel Limited's CEO Compensation With the industry

Our data indicates that BlueScope Steel Limited has a market capitalization of AU$6.4b, and total annual CEO compensation was reported as AU$4.6m for the year to June 2020. We note that's an increase of 23% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$1.8m.

On comparing similar companies from the same industry with market caps ranging from AU$2.8b to AU$8.8b, we found that the median CEO total compensation was AU$3.2m. Hence, we can conclude that Mark Vassella is remunerated higher than the industry median. Moreover, Mark Vassella also holds AU$11m worth of BlueScope Steel stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary AU$1.8m AU$1.8m 39%
Other AU$2.8m AU$2.0m 61%
Total CompensationAU$4.6m AU$3.7m100%

On an industry level, roughly 70% of total compensation represents salary and 30% is other remuneration. In BlueScope Steel's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ASX:BSL CEO Compensation August 28th 2020

BlueScope Steel Limited's Growth

Over the last three years, BlueScope Steel Limited has shrunk its earnings per share by 45% per year. It saw its revenue drop 9.9% over the last year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 BlueScope Steel Limited Been A Good Investment?

BlueScope Steel Limited has served shareholders reasonably well, with a total return of 21% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

As we noted earlier, BlueScope Steel pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Unfortunately, EPS has not grown in three years, failing to impress us. And shareholder returns are decent but not great. So you can understand why we do not think CEO compensation is particularly modest!

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for BlueScope Steel that investors should be aware of in a dynamic business environment.

Switching gears from BlueScope Steel, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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