Is Schnitzer Steel Industries, Inc.’s (NASDAQ:SCHN) CEO Being Overpaid?
Tamara Adler Lundgren became the CEO of Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) in 2008. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
View our latest analysis for Schnitzer Steel Industries
How Does Tamara Adler Lundgren’s Compensation Compare With Similar Sized Companies?
According to our data, Schnitzer Steel Industries, Inc. has a market capitalization of US$644m, and pays its CEO total annual compensation worth US$9.1m. (This number is for the twelve months until August 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$1.1m. When we examined a selection of companies with market caps ranging from US$400m to US$1.6b, we found the median CEO compensation was US$2.2m.
As you can see, Tamara Adler Lundgren is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Schnitzer Steel Industries, Inc. is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see a visual representation of the CEO compensation at Schnitzer Steel Industries, below.
Is Schnitzer Steel Industries, Inc. Growing?
Schnitzer Steel Industries, Inc. has increased its earnings per share (EPS) by an average of 118% a year, over the last three years (using a line of best fit). Its revenue is up 33% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. You might want to check this free visual report on analyst forecasts for future earnings.
Has Schnitzer Steel Industries, Inc. Been A Good Investment?
Boasting a total shareholder return of 57% over three years, Schnitzer Steel Industries, Inc. has done well by shareholders. 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.
In Summary…
We compared total CEO remuneration at Schnitzer Steel Industries, Inc. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of 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. So, considering this good performance, the CEO compensation may be quite appropriate. Whatever your view on compensation, you might want to check if insiders are buying or selling Schnitzer Steel Industries shares (free trial).
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.
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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.
