This article will reflect on the compensation paid to Andrew McLellan who has served as CEO of Bluechiip Limited (ASX:BCT) since 2015. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Bluechiip.
Comparing Bluechiip Limited's CEO Compensation With the industry
Our data indicates that Bluechiip Limited has a market capitalization of AU$28m, and total annual CEO compensation was reported as AU$444k for the year to June 2020. That's a slightly lower by 3.4% over the previous year. We note that the salary portion, which stands at AU$254.9k constitutes the majority of total compensation received by the CEO.
For comparison, other companies in the industry with market capitalizations below AU$284m, reported a median total CEO compensation of AU$380k. From this we gather that Andrew McLellan is paid around the median for CEOs in the industry. Furthermore, Andrew McLellan directly owns AU$329k worth of shares in the company.
On an industry level, roughly 57% of total compensation represents salary and 43% is other remuneration. There isn't a significant difference between Bluechiip and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Bluechiip Limited's Growth Numbers
Bluechiip Limited has reduced its earnings per share by 9.9% a year over the last three years. Its revenue is down 77% over the previous year.
The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Bluechiip Limited Been A Good Investment?
Bluechiip Limited has generated a total shareholder return of 26% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
As we touched on above, Bluechiip Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Bluechiip has had a tough time in recent years, with declining EPS growth, and although shareholder returns are stable, they are hardly worth celebrating. These figures do not go well against CEO compensation, which is more or less equal to the industry median. Considering all of this, we can't say the CEO is underpaid, and moving forward shareholders will likely want to see higher growth to justify any raise.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 5 warning signs for Bluechiip (2 shouldn't be ignored!) that you should be aware of before investing here.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
When trading Bluechiip or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.
This article by Simply Wall St is general in nature. 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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email email@example.com.