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Should You Worry About Ryerson Holding Corporation's (NYSE:RYI) CEO Pay Cheque?

Simply Wall St

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Eddie Lehner has been the CEO of Ryerson Holding Corporation (NYSE:RYI) since 2015. 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 Ryerson Holding

How Does Eddie Lehner's Compensation Compare With Similar Sized Companies?

According to our data, Ryerson Holding Corporation has a market capitalization of US$268m, and pays its CEO total annual compensation worth US$4.2m. (This number is for the twelve months until December 2018). We note that's an increase of 37% above last year. While we always look at total compensation first, we note that the salary component is less, at US$863k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$100m to US$400m. The median total CEO compensation was US$1.1m.

As you can see, Eddie Lehner is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Ryerson Holding Corporation is paying too much. 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 Ryerson Holding, below.

NYSE:RYI CEO Compensation, June 18th 2019

Is Ryerson Holding Corporation Growing?

On average over the last three years, Ryerson Holding Corporation has grown earnings per share (EPS) by 90% each year (using a line of best fit). Its revenue is up 35% 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. It could be important to check this free visual depiction of what analysts expect for the future.

Has Ryerson Holding Corporation Been A Good Investment?

Since shareholders would have lost about 57% over three years, some Ryerson Holding Corporation shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We compared the total CEO remuneration paid by Ryerson Holding Corporation, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

However, the earnings per share growth over three years is certainly impressive. However, the returns to investors are far less impressive, over the same period. So shareholders might not feel great about the fact that CEO pay increased on last year. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Ryerson Holding (free visualization of insider trades).

Important note: Ryerson Holding may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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.

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.