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We Think Shareholders Are Less Likely To Approve A Pay Rise For Alchemy Resources Limited's (ASX:ALY) CEO For Now

Key Insights

In the past three years, the share price of Alchemy Resources Limited (ASX:ALY) has struggled to grow and now shareholders are sitting on a loss. Per share earnings growth is also lacking, despite revenue growth. The AGM coming up on 21st of November will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders might be hesitant about approving a raise at the moment.

View our latest analysis for Alchemy Resources

How Does Total Compensation For James Wilson Compare With Other Companies In The Industry?

At the time of writing, our data shows that Alchemy Resources Limited has a market capitalization of AU$13m, and reported total annual CEO compensation of AU$332k for the year to June 2023. Notably, that's an increase of 17% over the year before. In particular, the salary of AU$240.0k, makes up a huge portion of the total compensation being paid to the CEO.

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On comparing similar-sized companies in the Australian Metals and Mining industry with market capitalizations below AU$314m, we found that the median total CEO compensation was AU$389k. From this we gather that James Wilson is paid around the median for CEOs in the industry.

Component

2023

2022

Proportion (2023)

Salary

AU$240k

AU$200k

72%

Other

AU$92k

AU$85k

28%

Total Compensation

AU$332k

AU$285k

100%

On an industry level, around 61% of total compensation represents salary and 39% is other remuneration. Alchemy Resources is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

ceo-compensation
ceo-compensation

Alchemy Resources Limited's Growth

Over the last three years, Alchemy Resources Limited has shrunk its earnings per share by 1.4% per year. It achieved revenue growth of 1,013% over the last year.

Investors would be a bit wary of companies that have lower EPS On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Alchemy Resources Limited Been A Good Investment?

With a total shareholder return of -41% over three years, Alchemy Resources Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The company's earnings haven't grown and possibly because of that, the stock has performed poorly, resulting in a loss for the company's shareholders. Shareholders will get the chance at the upcoming AGM 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.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 4 warning signs for Alchemy Resources (of which 3 are a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

Important note: Alchemy Resources 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.

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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.