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Does Cleveland-Cliffs Inc.’s (NYSE:CLF) CEO Salary Reflect Performance?

Andrew Edmonds

C. Goncalves became the CEO of Cleveland-Cliffs Inc. (NYSE:CLF) in 2014. First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Cleveland-Cliffs

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

According to our data, Cleveland-Cliffs Inc. has a market capitalization of US$2.7b, and pays its CEO total annual compensation worth US$24m. (This figure is for the year to 2017). While we always look at total compensation first, we note that the salary component is less, at US$1.3m. 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$4.9m.

It would therefore appear that Cleveland-Cliffs Inc. pays C. Goncalves more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at Cleveland-Cliffs, below.

NYSE:CLF CEO Compensation January 25th 19

Is Cleveland-Cliffs Inc. Growing?

On average over the last three years, Cleveland-Cliffs Inc. has grown earnings per share (EPS) by 28% each year (using a line of best fit). Its revenue is up 24% over last year.

This demonstrates that the company has been improving recently. A good result. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business.

It could be important to check this free visual depiction of what analysts expect for the future.

Has Cleveland-Cliffs Inc. Been A Good Investment?

Most shareholders would probably be pleased with Cleveland-Cliffs Inc. for providing a total return of 458% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary…

We compared total CEO remuneration at Cleveland-Cliffs Inc. with the amount paid at companies with a similar market capitalization. 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. On top of that, in the same period, returns to shareholders have been great. 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.

Or you could feast your eyes on this interactive graph depicting past earnings, cash flow and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.