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Bill Clayton has been the CEO of Lodestar Minerals Limited (ASX:LSR) since 2007, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Lodestar Minerals.
Comparing Lodestar Minerals Limited's CEO Compensation With the industry
At the time of writing, our data shows that Lodestar Minerals Limited has a market capitalization of AU$14m, and reported total annual CEO compensation of AU$177k for the year to June 2020. We note that's a decrease of 33% compared to last year. In particular, the salary of AU$160.4k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the industry with market capitalizations below AU$273m, we found that the median total CEO compensation was AU$312k. Accordingly, Lodestar Minerals pays its CEO under the industry median.
On an industry level, roughly 70% of total compensation represents salary and 30% is other remuneration. Lodestar Minerals pays out 90% 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 Lodestar Minerals Limited's Growth Numbers
Over the past three years, Lodestar Minerals Limited has seen its earnings per share (EPS) grow by 33% per year. It saw its revenue drop 84% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Lodestar Minerals Limited Been A Good Investment?
Most shareholders would probably be pleased with Lodestar Minerals Limited for providing a total return of 45% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As previously discussed, Bill is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. Considering robust EPS growth, we believe Bill to be modestly paid. And given most shareholders are probably very happy with recent shareholder returns, they might even think Bill deserves a raise!
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 5 warning signs for Lodestar Minerals you should be aware of, and 3 of them are significant.
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.
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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