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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.
How Does Total Compensation For Andrew McLellan Compare With Other Companies In The Industry?
At the time of writing, our data shows that Bluechiip Limited has a market capitalization of AU$37m, 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. In particular, the salary of AU$254.9k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below AU$274m, reported a median total CEO compensation of AU$286k. This suggests that Andrew McLellan is paid more than the median for the industry. Furthermore, Andrew McLellan directly owns AU$474k worth of shares in the company.
On an industry level, roughly 71% of total compensation represents salary and 29% is other remuneration. It's interesting to note that Bluechiip allocates a smaller portion of compensation to salary in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Bluechiip Limited's Growth Numbers
Over the last three years, Bluechiip Limited has shrunk its earnings per share by 9.8% per year. In the last year, its revenue is down 77%.
Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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?
We think that the total shareholder return of 107%, over three years, would leave most Bluechiip Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
As we noted earlier, Bluechiip pays its CEO higher than the norm for similar-sized companies belonging to the same industry. The company isn't growing EPS, but shareholder returns have been impressive over the last three years. Considering positive investor returns, it would be bold of us to criticize CEO compensation, but shareholders might want to see healthier EPS growth before a raise is given out.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 5 warning signs for Bluechiip (of which 2 make us uncomfortable!) that you should know about in order to have a holistic understanding of the stock.
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.
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.
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