Stock Analysis

What Can We Learn About Bluechiip's (ASX:BCT) CEO Compensation?

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ASX:BCT
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Andrew McLellan has been the CEO of Bluechiip Limited (ASX:BCT) since 2015, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Bluechiip pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Bluechiip

Comparing Bluechiip Limited's CEO Compensation With the industry

At the time of writing, our data shows that Bluechiip Limited has a market capitalization of AU$28m, and reported total annual CEO compensation of 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$258m, reported a median total CEO compensation of AU$395k. This suggests that Bluechiip remunerates its CEO largely in line with the industry average. Furthermore, Andrew McLellan directly owns AU$344k worth of shares in the company.

Component20202019Proportion (2020)
Salary AU$255k AU$249k 57%
Other AU$189k AU$210k 43%
Total CompensationAU$444k AU$459k100%

On an industry level, around 61% of total compensation represents salary and 39% 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.

ceo-compensation
ASX:BCT CEO Compensation February 19th 2021

Bluechiip Limited's Growth

Bluechiip Limited has reduced its earnings per share by 9.9% a year over the last three years. In the last year, its revenue is down 77%.

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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Bluechiip Limited Been A Good Investment?

With a three year total loss of 31% for the shareholders, Bluechiip Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we noted earlier, Bluechiip pays its CEO in line with similar-sized companies belonging to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Bluechiip (2 don't sit too well with us!) that you should be aware of before investing here.

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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