Steve Schwarzman became the CEO of The Blackstone Group Inc. (NYSE:BX) in 2007, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Blackstone Group.
How Does Total Compensation For Steve Schwarzman Compare With Other Companies In The Industry?
Our data indicates that The Blackstone Group Inc. has a market capitalization of US$61b, and total annual CEO compensation was reported as US$57m for the year to December 2019. Notably, that's a decrease of 17% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$350k.
On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$13m. Accordingly, our analysis reveals that The Blackstone Group Inc. pays Steve Schwarzman north of the industry median.
On an industry level, roughly 13% of total compensation represents salary and 87% is other remuneration. Interestingly, the company has chosen to go down an unconventional route in that it pays a smaller salary to Steve Schwarzman as compared to non-salary compensation over the one-year period examined. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at The Blackstone Group Inc.'s Growth Numbers
Over the last three years, The Blackstone Group Inc. has shrunk its earnings per share by 20% per year. Its revenue is down 48% 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has The Blackstone Group Inc. Been A Good Investment?
Most shareholders would probably be pleased with The Blackstone Group Inc. for providing a total return of 77% over three years. 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.
Blackstone Group primarily uses non-salary benefits to reward its CEO. As previously discussed, Steve is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. We're not seeing great strides in EPS, but the company has clearly pleased some investors, given the returns over the last three years. So while we would not say that Steve is generously paid, stockholders would want to see some EPS growth before agreeing that a raise is a good idea.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 3 warning signs for Blackstone Group that investors should look into moving forward.
Important note: Blackstone Group is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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