Russ Parker became the CEO of Crater Gold Mining Limited (ASX:CGN) in 2015, 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 assess whether Crater Gold Mining pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Crater Gold Mining Limited's CEO Compensation With the industry
Our data indicates that Crater Gold Mining Limited has a market capitalization of AU$15m, and total annual CEO compensation was reported as AU$211k for the year to June 2020. That's a modest increase of 6.6% on the prior year. In particular, the salary of AU$162.0k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below AU$279m, reported a median total CEO compensation of AU$303k. In other words, Crater Gold Mining pays its CEO lower than the industry median.
On an industry level, roughly 69% of total compensation represents salary and 31% is other remuneration. Crater Gold Mining pays out 77% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Crater Gold Mining Limited's Growth Numbers
Crater Gold Mining Limited has seen its earnings per share (EPS) increase by 93% a year over the past three years. Its revenue is down 31% over the previous year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Crater Gold Mining Limited Been A Good Investment?
We think that the total shareholder return of 50%, over three years, would leave most Crater Gold Mining Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
As we noted earlier, Crater Gold Mining pays its CEO lower than the norm for similar-sized companies belonging to the same industry. Since EPS growth is heading in a positive direction; many would agree with our assessment that the pay is modest. Plus, we can't ignore the impressive shareholder returns, and won't be surprised if some shareholders were to reward such excellent all-around performance with a raise.
CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 4 warning signs for Crater Gold Mining (of which 2 are concerning!) that you should know about in order to have a holistic understanding of the stock.
Important note: Crater Gold Mining is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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