Yahoo Finance Here's Why Shareholders May Want To Be Cautious With Increasing Newcrest Mining Limited's (ASX:NCM) CEO Pay Packet
In the past three years, the share price of Newcrest Mining Limited (ASX:NCM) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 08 November 2022 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
Check out our latest analysis for Newcrest Mining
Comparing Newcrest Mining Limited's CEO Compensation With The Industry
At the time of writing, our data shows that Newcrest Mining Limited has a market capitalization of AU$16b, and reported total annual CEO compensation of US$6.3m for the year to June 2022. That's a notable decrease of 18% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.7m.
In comparison with other companies in the industry with market capitalizations over AU$13b, the reported median total CEO compensation was US$3.8m. This suggests that Sandeep Biswas is paid more than the median for the industry. Furthermore, Sandeep Biswas directly owns AU$13m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2022 | 2021 | Proportion (2022) |
Salary | US$1.7m | US$1.8m | 27% |
Other | US$4.6m | US$6.0m | 73% |
Total Compensation | US$6.3m | US$7.7m | 100% |
On an industry level, roughly 60% of total compensation represents salary and 40% is other remuneration. It's interesting to note that Newcrest Mining allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Newcrest Mining Limited's Growth Numbers
Newcrest Mining Limited's earnings per share (EPS) grew 10% per year over the last three years. It saw its revenue drop 8.1% over the last 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. 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 Newcrest Mining Limited Been A Good Investment?
With a total shareholder return of -39% over three years, Newcrest Mining Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.
In Summary...
Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for Newcrest Mining that investors should be aware of in a dynamic business environment.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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