Increases to BlueScope Steel Limited's (ASX:BSL) CEO Compensation Might Cool off for now

Despite strong share price growth of 65% for BlueScope Steel Limited (ASX:BSL) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 17 November 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

See our latest analysis for BlueScope Steel

Comparing BlueScope Steel Limited's CEO Compensation With the industry

According to our data, BlueScope Steel Limited has a market capitalization of AU$10b, and paid its CEO total annual compensation worth AU$5.5m over the year to June 2021. That's a notable increase of 20% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$1.8m.

On examining similar-sized companies in the industry with market capitalizations between AU$5.4b and AU$16b, we discovered that the median CEO total compensation of that group was AU$2.7m. This suggests that Mark Vassella is paid more than the median for the industry. Furthermore, Mark Vassella directly owns AU$20m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2021	2020	Proportion (2021)
Salary	AU$1.8m	AU$1.8m	32%
Other	AU$3.7m	AU$2.8m	68%
Total Compensation	AU$5.5m	AU$4.6m	100%

On an industry level, around 59% of total compensation represents salary and 41% is other remuneration. It's interesting to note that BlueScope Steel allocates a smaller portion of compensation to salary 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.

BlueScope Steel Limited's Growth

BlueScope Steel Limited has reduced its earnings per share by 5.4% a year over the last three years. In the last year, its revenue is up 14%.

Few shareholders would be pleased to read that EPS have declined. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. 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?

Boasting a total shareholder return of 65% over three years, BlueScope Steel Limited has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

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 1 warning sign for BlueScope Steel that investors should think about before committing capital to this stock.

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.

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.

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