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Is Cleveland-Cliffs Inc. (NYSE:CLF) Overpaying Its CEO?

Simply Wall St

C. Goncalves has been the CEO of Cleveland-Cliffs Inc. (NYSE:CLF) since 2014. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Cleveland-Cliffs

How Does C. Goncalves's Compensation Compare With Similar Sized Companies?

Our data indicates that Cleveland-Cliffs Inc. is worth US$3.0b, and total annual CEO compensation is US$15m. (This number is for the twelve months until December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$1.4m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$2.0b to US$6.4b. The median total CEO compensation was US$5.2m.

Thus we can conclude that C. Goncalves receives more in total compensation than the median of a group of companies in the same market, and of similar size to Cleveland-Cliffs Inc.. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see, below, how CEO compensation at Cleveland-Cliffs has changed over time.

NYSE:CLF CEO Compensation, July 23rd 2019

Is Cleveland-Cliffs Inc. Growing?

Over the last three years Cleveland-Cliffs Inc. has grown its earnings per share (EPS) by an average of 80% per year (using a line of best fit). In the last year, its revenue is up 17%.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. You might want to check this free visual report on analyst forecasts for future earnings.

Has Cleveland-Cliffs Inc. Been A Good Investment?

Most shareholders would probably be pleased with Cleveland-Cliffs Inc. for providing a total return of 42% over three years. 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.

In Summary...

We examined the amount Cleveland-Cliffs Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. In addition, shareholders have done well over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. Shareholders may want to check for free if Cleveland-Cliffs insiders are buying or selling shares.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.