Australia markets closed
  • ALL ORDS

    7,266.30
    +151.80 (+2.13%)
     
  • ASX 200

    6,988.10
    +149.80 (+2.19%)
     
  • AUD/USD

    0.6998
    -0.0035 (-0.50%)
     
  • OIL

    87.29
    +0.68 (+0.79%)
     
  • GOLD

    1,792.30
    -2.70 (-0.15%)
     
  • BTC-AUD

    54,088.79
    +574.80 (+1.07%)
     
  • CMC Crypto 200

    863.83
    +21.37 (+2.54%)
     
  • AUD/EUR

    0.6273
    -0.0035 (-0.56%)
     
  • AUD/NZD

    1.0675
    -0.0006 (-0.06%)
     
  • NZX 50

    11,852.15
    -198.17 (-1.64%)
     
  • NASDAQ

    14,454.61
    +451.50 (+3.22%)
     
  • FTSE

    7,466.07
    -88.24 (-1.17%)
     
  • Dow Jones

    34,725.47
    +564.69 (+1.65%)
     
  • DAX

    15,318.95
    -205.32 (-1.32%)
     
  • Hang Seng

    23,550.08
    -256.92 (-1.08%)
     
  • NIKKEI 225

    26,717.34
    +547.04 (+2.09%)
     

We Take A Look At Why Lynas Rare Earths Limited's (ASX:LYC) CEO Has Earned Their Pay Packet

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·3-min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • LYSCF
  • LYSDY

We have been pretty impressed with the performance at Lynas Rare Earths Limited (ASX:LYC) recently and CEO Amanda Lacaze deserves a mention for their role in it. Coming up to the next AGM on 28 November 2021, shareholders would be keeping this in mind. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.

See our latest analysis for Lynas Rare Earths

How Does Total Compensation For Amanda Lacaze Compare With Other Companies In The Industry?

According to our data, Lynas Rare Earths Limited has a market capitalization of AU$7.7b, and paid its CEO total annual compensation worth AU$2.3m over the year to June 2021. Notably, that's an increase of 12% over the year before. Notably, the salary which is AU$1.25m, represents a considerable chunk of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations ranging from AU$5.5b to AU$17b, the reported median CEO total compensation was AU$2.7m. From this we gather that Amanda Lacaze is paid around the median for CEOs in the industry. Moreover, Amanda Lacaze also holds AU$29m worth of Lynas Rare Earths stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2021

2020

Proportion (2021)

Salary

AU$1.3m

AU$1.2m

54%

Other

AU$1.1m

AU$806k

46%

Total Compensation

AU$2.3m

AU$2.0m

100%

On an industry level, around 59% of total compensation represents salary and 41% is other remuneration. Although there is a difference in how total compensation is set, Lynas Rare Earths more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
ceo-compensation

Lynas Rare Earths Limited's Growth

Over the past three years, Lynas Rare Earths Limited has seen its earnings per share (EPS) grow by 25% per year. In the last year, its revenue is up 60%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Lynas Rare Earths Limited Been A Good Investment?

Most shareholders would probably be pleased with Lynas Rare Earths Limited for providing a total return of 313% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Some shareholders will probably be more lenient on CEO compensation in the upcoming AGM given the pleasing performance of the company recently. However, despite the strong growth in earnings and share price growth, the focus for shareholders would be how the company plans to steer the company towards sustainable profitability in the near future.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Lynas Rare Earths that investors should think about before committing capital to this stock.

Switching gears from Lynas Rare Earths, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting