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Should You Worry About Emmerson Resources Limited's (ASX:ERM) CEO Salary Level?

In 2007 Rob Bills was appointed CEO of Emmerson Resources Limited (ASX:ERM). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. 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.

View our latest analysis for Emmerson Resources

How Does Rob Bills's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Emmerson Resources Limited has a market cap of AU$30m, and reported total annual CEO compensation of AU$398k for the year to June 2019. While we always look at total compensation first, we note that the salary component is less, at AU$368k. We took a group of companies with market capitalizations below AU$316m, and calculated the median CEO total compensation to be AU$390k.

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Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Speaking on an industry level, we can see that nearly 69% of total compensation represents salary, while the remainder of 31% is other remuneration. Emmerson Resources pays out 92% of aggregate payment in the shape of a salary, which is significantly higher than the industry average.

So Rob Bills is paid around the average of the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance. The graphic below shows how CEO compensation at Emmerson Resources has changed from year to year.

ASX:ERM CEO Compensation April 17th 2020
ASX:ERM CEO Compensation April 17th 2020

Is Emmerson Resources Limited Growing?

Over the last three years Emmerson Resources Limited has seen earnings per share (EPS) move in a positive direction by an average of 38% per year (using a line of best fit). In the last year, its revenue is down 67%.

This shows that the company has improved itself over the last few years. Good news for shareholders. Revenue growth is a real positive for growth, but ultimately profits are more important. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Emmerson Resources Limited Been A Good Investment?

With a three year total loss of 28%, Emmerson Resources Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

Rob Bills is paid around the same as most CEOs of similar size companies.

We'd say the company can boast of its EPS growth, but it's disappointing to see negative shareholder returns over three years. Considering the the positives we don't think the CEO pays is too high, but it's certainly hard to argue it is too low. Shifting gears from CEO pay for a second, we've spotted 5 warning signs for Emmerson Resources you should be aware of, and 2 of them shouldn't be ignored.

Important note: Emmerson Resources may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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.