Stock Analysis

How Should Investors Feel About BlueScope Steel's (ASX:BSL) CEO Remuneration?

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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 assess whether BlueScope Steel pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

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Comparing BlueScope Steel Limited's CEO Compensation With the industry

According to our data, BlueScope Steel Limited has a market capitalization of AU$8.7b, and paid its CEO total annual compensation worth AU$4.6m over the year to June 2020. We note that's an increase of 23% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$1.8m.

In comparison with other companies in the industry with market capitalizations ranging from AU$5.4b to AU$16b, the reported median CEO total compensation was AU$3.2m. Hence, we can conclude that Mark Vassella is remunerated higher than the industry median. Furthermore, Mark Vassella directly owns AU$15m worth of shares in the company, implying that they are deeply invested in the company's success.

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%

Talking in terms of the industry, salary represented approximately 70% of total compensation out of all the companies we analyzed, while other remuneration made up 30% of the pie. BlueScope Steel sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ASX:BSL CEO Compensation November 30th 2020

A Look at BlueScope Steel Limited's Growth Numbers

Over the last three years, BlueScope Steel Limited has shrunk its earnings per share by 45% per year. In the last year, its revenue is down 9.9%.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has BlueScope Steel Limited Been A Good Investment?

With a total shareholder return of 29% over three years, BlueScope Steel Limited shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

As previously discussed, Mark is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. This doesn't look great when you realize that the company has been suffering from negative EPS growth for the last three years. While shareholder returns are acceptable, they don't delight. So you can understand why we do not think CEO compensation is particularly modest!

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 4 warning signs for BlueScope Steel that investors should think about before committing capital to this stock.

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