Nucor: Great company, less-than-great stock?
Charlotte-based Nucor Corp. has a remarkable corporate history, having emerged as the biggest U.S. steel company. It’s also had plenty of success since John Ferriola became chief operating officer of steelmaking operations in 2007, and CEO in January 2013. From 2016-18, Nucor posted cumulative earnings of $4.4 billion.
Unfortunately, for many investors, it hasn’t been a great stock to hold. Ferriola, 67, is resigning at the end of the year, the company said last week.
During his term as CEO, Nucor shares have increased about 9%, while the S&P 500 Index has gained about 100%. During the same period, the Industrial Select Sector SPDR exchange-traded fund, which has the XLI ticker and includes Boeing, Honeywell, GE and other giant companies, has increased more than 90%.
Nucor competes against many foreign steelmakers that receive significant government support and may not face similar labor-market and environmental regulations. Hopes that the Trump administration’s “make-it-in-America” push would help hasn’t significantly lifted Nucor shares.
Going back 10 years, starting in the period when U.S. stocks were depressed, Nucor shares have gained more than 25%, while the S&P 500 and XLI fund each increased by more than 185%.
Stock price isn’t a CEO’s only measure, of course. Ferriola has overseen annual revenue growth from about $19.5 billion to $25 billion during his tenure. And Nucor’s board has showered him with cumulative compensation topping $38 million over the last three years.
“John Ferriola has been a thought leader in the steel industry and helped position Nucor at the forefront of its peers,” John Walker, the company’s lead independent director, said in a statement.
Ferriola’s successor will be Leon Topalian, 51, who has worked at the company since 1996, including the last three years as executive president. He isn’t well-known and hasn’t been among the company’s five highest-paid executives, but that will change in 2020.