BlueScope Steel's chairman Graham Kraehe has been grilled over executive pay despite insisting the company is on the path back to paying dividends.

Some investors at the company’s annual general meeting criticised the granting of share rights worth more than $3 million to chief executive Paul O’Malley after BlueScope did not pay a dividend in 2013-14, reporting a net loss of $82.4 million.

Mr O’Malley’s total salary package in 2013-14 was $4.95 million, including base pay of $1.8 million and a short term bonus of more than $1 million.

However the steel and building products manufacturer has not made a profit since 2010 and stopped paying dividends not long after.

Its shares tumbled from $16.47 in January 2010 and hit a low of $1.56 in July 2012.

They rose 1.8 per cent to $5.10 on Thursday after BlueScope Steel confirmed first-half guidance for an underlying net profit – which strips out one-off costs – similar to the $89.6 million result in the second half of 2013-14.

Mr Kraehe argued that the company’s turnaround has been substantial from the multi-billion dollar losses of recent years, with underlying earnings before interest and tax more than tripling to $249.7 million.

Earnings grew in its six divisions with one-off restructuring and corporate costs blamed for the net loss.

“The company’s continued turnaround and progress on growth initiatives have laid a solid foundation for a future return to paying dividends,” Mr Kraehe told shareholders in Melbourne.

Australia’s biggest steelmaker was encouraged by demand in the nation’s housing construction market, US trading conditions and the continued strength of trading conditions in South East Asia.

However Rex McKenzie, of the Australian Shareholders Association, was one of several people to disagree, saying “shareholders will believe the company has been turned around when they receive a dividend”.

BlueScope’s recent difficult history occurred when it faced high raw material costs, a weak local construction market, the dumping of cheap overseas steel in Australia and an inability to compete overseas.

Some factors had eased, such as the fall in the iron ore price, but the company’s Australian businesses were suffering from a recent fall in globally traded steel selling prices and concerns about demand in Australian sectors other than building and construction.

It has dramatically restructured and cut costs and employee numbers and Mr O’Malley told shareholders the company was moving beyond survival mode and striving for growth across its global portfolio.

The best market conditions were in BlueScope’s North American operations with building activity tipped to be strong this year, but market conditions in China for its custom engineered buildings business remain difficult, Mr O’Malley said.

By Greg Roberts