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Is Schnitzer Steel Industries, Inc.'s (NASDAQ:SCHN) CEO Salary Justified?

Simply Wall St

Tamara Adler Lundgren became the CEO of Schnitzer Steel Industries, Inc. (NASDAQ:SCHN) in 2008. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. 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.

Check out our latest analysis for Schnitzer Steel Industries

How Does Tamara Adler Lundgren's Compensation Compare With Similar Sized Companies?

Our data indicates that Schnitzer Steel Industries, Inc. is worth US$579m, and total annual CEO compensation was reported as US$9.1m for the year to August 2018. While we always look at total compensation first, we note that the salary component is less, at US$1.1m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations from US$200m to US$800m, and the median CEO total compensation was US$1.7m.

Thus we can conclude that Tamara Adler Lundgren receives more in total compensation than the median of a group of companies in the same market, and of similar size to Schnitzer Steel Industries, 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.

The graphic below shows how CEO compensation at Schnitzer Steel Industries has changed from year to year.

NasdaqGS:SCHN CEO Compensation, December 12th 2019

Is Schnitzer Steel Industries, Inc. Growing?

Over the last three years Schnitzer Steel Industries, Inc. has grown its earnings per share (EPS) by an average of 56% per year (using a line of best fit). In the last year, its revenue is down 9.8%.

This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. It could be important to check this free visual depiction of what analysts expect for the future.

Has Schnitzer Steel Industries, Inc. Been A Good Investment?

Since shareholders would have lost about 15% over three years, some Schnitzer Steel Industries, Inc. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared the total CEO remuneration paid by Schnitzer Steel Industries, Inc., and compared it to remuneration at a group of similar sized companies. 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. Having said that, shareholders may be disappointed with the weak returns over the last three years. Considering the per share profit growth, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Schnitzer Steel Industries.

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.

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.

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. Thank you for reading.