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Is Rumble Resources Limited's (ASX:RTR) CEO Paid Enough Relative To Peers?

Simply Wall St
·3-min read

In 2013, Shane Sikora was appointed CEO of Rumble Resources Limited (ASX:RTR). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Rumble Resources

How Does Shane Sikora's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Rumble Resources Limited has a market cap of AU$30m, and reported total annual CEO compensation of AU$219k for the year to June 2019. While we always look at total compensation first, we note that the salary component is less, at AU$196k. We examined a group of similar sized companies, with market capitalizations of below AU$313m. The median CEO total compensation in that group is AU$385k.

Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Rumble Resources stands. On an industry level, roughly 69% of total compensation represents salary and 31% is other remuneration. Our data reveals that Rumble Resources allocates salary in line with the wider market.

Most shareholders would consider it a positive that Shane Sikora takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance. The graphic below shows how CEO compensation at Rumble Resources has changed from year to year.

ASX:RTR CEO Compensation April 25th 2020
ASX:RTR CEO Compensation April 25th 2020

Is Rumble Resources Limited Growing?

Over the last three years Rumble Resources Limited has shrunk its earnings per share by an average of 6.0% per year (measured with a line of best fit). Its revenue is up 287% over last year.

As investors, we are a bit wary of companies that have lower earnings per share, over three years. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Although we don't have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Rumble Resources Limited Been A Good Investment?

Boasting a total shareholder return of 169% over three years, Rumble Resources Limited has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

Rumble Resources Limited is currently paying its CEO below what is normal for companies of its size.

It's well worth noting that while Shane Sikora is paid below what is normal at companies of similar size, the returns have been very pleasing, over the last three years. Although we could see higher growth, we'd argue the remuneration is modest, based on these observations. CEO compensation is an important area to keep your eyes on, but we've also identified 7 warning signs for Rumble Resources (3 are potentially serious!) that you should be aware of before investing here.

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.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.