Yahoo Finance Is Arafura Resources Limited's (ASX:ARU) CEO Paid At A Competitive Rate?
In 2013, Gavin Lockyer was appointed CEO of Arafura Resources Limited (ASX:ARU). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for Arafura Resources
How Does Gavin Lockyer's Compensation Compare With Similar Sized Companies?
According to our data, Arafura Resources Limited has a market capitalization of AU$75m, and paid its CEO total annual compensation worth AU$533k over the year to June 2019. We think total compensation is more important but we note that the CEO salary is lower, at AU$401k. We examined a group of similar sized companies, with market capitalizations of below AU$311m. The median CEO total compensation in that group is AU$390k.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. On an industry level, roughly 69% of total compensation represents salary and 31% is other remuneration. Arafura Resources is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation
Thus we can conclude that Gavin Lockyer receives more in total compensation than the median of a group of companies in the same market, and of similar size to Arafura Resources Limited. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous. You can see, below, how CEO compensation at Arafura Resources has changed over time.
Is Arafura Resources Limited Growing?
Over the last three years Arafura Resources Limited has seen earnings per share (EPS) move in a positive direction by an average of 2.9% per year (using a line of best fit). Its revenue is up 34% over last year.
It's hard to interpret the strong revenue growth as anything other than a positive. Combined with modest EPS growth, we get a good impression of the company. So while I'd stop short of saying growth is absolutely outstanding, there are definitely some clear positives! Shareholders might be interested in this free visualization of analyst forecasts.
Has Arafura Resources Limited Been A Good Investment?
Arafura Resources Limited has served shareholders reasonably well, with a total return of 26% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
In Summary...
We compared total CEO remuneration at Arafura Resources Limited with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
We generally prefer to see stronger EPS growth, and we're not particularly impressed with the total shareholder return, over the last three years. In conclusion we think the company should definitely focus on improving the business before awarding any large pay rises. Shifting gears from CEO pay for a second, we've spotted 6 warning signs for Arafura Resources you should be aware of, and 2 of them are a bit concerning.
Important note: Arafura Resources 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.
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.
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