A Quick Analysis On Glencore's (LON:GLEN) CEO Compensation

Ivan Glasenberg became the CEO of Glencore plc (LON:GLEN) in 2002, 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Glencore

Comparing Glencore plc's CEO Compensation With the industry

At the time of writing, our data shows that Glencore plc has a market capitalization of UK£23b, and reported total annual CEO compensation of US$1.5m for the year to December 2019. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at US$1.45m constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations over UK£6.1b , the reported median total CEO compensation was US$2.1m. This suggests that Glencore remunerates its CEO largely in line with the industry average. What's more, Ivan Glasenberg holds UK£2.1b worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, around 67% of total compensation represents salary and 33% is other remuneration. Glencore pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Glencore plc's Growth

Over the last three years, Glencore plc has shrunk its earnings per share by 82% per year. It saw its revenue drop 19% over the last year.

The decline in earnings is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Glencore plc Been A Good Investment?

Given the total shareholder loss of 40% over three years, many shareholders in Glencore plc are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

Ivan receives almost all of their compensation through a salary. As previously discussed, Ivan is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, earnings growth and total shareholder return have been negative for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Glencore that investors should think about before committing capital to this stock.

Switching gears from Glencore, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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