Yahoo Finance How Is Neometals' (ASX:NMT) CEO Compensated?
Chris Reed has been the CEO of Neometals Ltd (ASX:NMT) since 2013, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
See our latest analysis for Neometals
How Does Total Compensation For Chris Reed Compare With Other Companies In The Industry?
According to our data, Neometals Ltd has a market capitalization of AU$106m, and paid its CEO total annual compensation worth AU$911k over the year to June 2020. That's just a smallish increase of 4.7% on last year. We note that the salary portion, which stands at AU$515.0k constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations under AU$278m, the reported median total CEO compensation was AU$300k. Hence, we can conclude that Chris Reed is remunerated higher than the industry median. What's more, Chris Reed holds AU$638k worth of shares in the company in their own name.
Component | 2020 | 2019 | Proportion (2020) |
Salary | AU$515k | AU$515k | 57% |
Other | AU$396k | AU$355k | 43% |
Total Compensation | AU$911k | AU$870k | 100% |
On an industry level, roughly 69% of total compensation represents salary and 31% is other remuneration. Neometals sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Neometals Ltd's Growth Numbers
Over the last three years, Neometals Ltd has shrunk its earnings per share by 90% per year. Its revenue is up 35% over the last year.
The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Neometals Ltd Been A Good Investment?
With a three year total loss of 13% for the shareholders, Neometals Ltd would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
As we noted earlier, Neometals pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Meanwhile, the company has been unable to show any EPS growth, and shareholder returns are also in the red. On the bright side, at lease revenue growth seems to be marching northward. Suffice it to say, we don't think the CEO is underpaid!
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 5 warning signs (and 1 which shouldn't be ignored) in Neometals we think you should know about.
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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