Yahoo Finance Shareholders May Find It Hard To Justify Increasing Bass Metals Limited's (ASX:BSM) CEO Compensation For Now
In the past three years, the share price of Bass Metals Limited (ASX:BSM) 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. These are some of the concerns that shareholders may want to bring up at the next AGM held on 15 March 2021. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.
Check out our latest analysis for Bass Metals
Comparing Bass Metals Limited's CEO Compensation With the industry
Our data indicates that Bass Metals Limited has a market capitalization of AU$24m, and total annual CEO compensation was reported as AU$304k for the year to June 2020. Notably, that's a decrease of 14% over the year before. In particular, the salary of AU$277.5k, 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$261m, we found that the median total CEO compensation was AU$311k. From this we gather that Tim McManus is paid around the median for CEOs in the industry. What's more, Tim McManus holds AU$128k worth of shares in the company in their own name.
Component | 2020 | 2019 | Proportion (2020) |
Salary | AU$278k | AU$305k | 91% |
Other | AU$26k | AU$48k | 9% |
Total Compensation | AU$304k | AU$353k | 100% |
Talking in terms of the industry, salary represented approximately 68% of total compensation out of all the companies we analyzed, while other remuneration made up 32% of the pie. According to our research, Bass Metals has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Bass Metals Limited's Growth
Bass Metals Limited's earnings per share (EPS) grew 25% per year over the last three years. Its revenue is up 6.8% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Bass Metals Limited Been A Good Investment?
The return of -73% over three years would not have pleased Bass Metals Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
In Summary...
The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 6 warning signs (and 2 which are a bit concerning) in Bass Metals we think you should know about.
Important note: Bass Metals is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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