Ken Allen became the CEO of Nex Metals Explorations Limited (ASX:NME) in 2007, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Nex Metals Explorations Limited's CEO Compensation With the industry
According to our data, Nex Metals Explorations Limited has a market capitalization of AU$15m, and paid its CEO total annual compensation worth AU$134k over the year to June 2020. That is, the compensation was roughly the same as last year. We note that the salary portion, which stands at AU$122.0k constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations under AU$282m, the reported median total CEO compensation was AU$311k. Accordingly, Nex Metals Explorations pays its CEO under the industry median. What's more, Ken Allen holds AU$451k worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Talking in terms of the industry, salary represented approximately 70% of total compensation out of all the companies we analyzed, while other remuneration made up 30% of the pie. According to our research, Nex Metals Explorations has allocated a higher percentage of pay to salary in comparison to the wider 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.
A Look at Nex Metals Explorations Limited's Growth Numbers
Over the last three years, Nex Metals Explorations Limited has shrunk its earnings per share by 73% per year. It saw its revenue drop 73% over the last year.
The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Nex Metals Explorations Limited Been A Good Investment?
Most shareholders would probably be pleased with Nex Metals Explorations Limited for providing a total return of 520% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
As we noted earlier, Nex Metals Explorations pays its CEO lower than the norm for similar-sized companies belonging to the same industry. And while EPS growth is in the red, shareholder returns have been great over the last three years, so that's certainly a bright spot! Although we'd like to see positive EPS growth, we'd argue the remuneration is modest, based on our observations.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 5 warning signs for Nex Metals Explorations you should be aware of, and 2 of them are significant.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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