Shareholders Will Probably Hold Off On Increasing NOVONIX Limited's (ASX:NVX) CEO Compensation For The Time Being

Key Insights

• NOVONIX will host its Annual General Meeting on 16th of April
• CEO Chris Burns' total compensation includes salary of US$659.6k
• Total compensation is 1,385% above industry average
• Over the past three years, NOVONIX's EPS fell by 28% and over the past three years, the total loss to shareholders 55%

In the past three years, the share price of NOVONIX Limited (ASX:NVX) has struggled to grow and now shareholders are sitting on a loss. In addition, the company's per-share earnings growth is not looking good, despite growing revenues. The AGM coming up on 16th of April 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. We think shareholders may be cautious of approving a pay rise for the CEO at the moment, based on our analysis below.

See our latest analysis for NOVONIX

How Does Total Compensation For Chris Burns Compare With Other Companies In The Industry?

Our data indicates that NOVONIX Limited has a market capitalization of AU$491m, and total annual CEO compensation was reported as US$2.1m for the year to December 2023. We note that's a decrease of 34% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$660k.

In comparison with other companies in the Australian Electronic industry with market capitalizations ranging from AU$302m to AU$1.2b, the reported median CEO total compensation was US$140k. Hence, we can conclude that Chris Burns is remunerated higher than the industry median. Furthermore, Chris Burns directly owns AU$3.5m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$660k	US$304k	32%
Other	US$1.4m	US$2.8m	68%
Total Compensation	US$2.1m	US$3.1m	100%

Speaking on an industry level, nearly 62% of total compensation represents salary, while the remainder of 38% is other remuneration. It's interesting to note that NOVONIX allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at NOVONIX Limited's Growth Numbers

Over the last three years, NOVONIX Limited has shrunk its earnings per share by 28% per year. It achieved revenue growth of 49% over the last year.

The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has NOVONIX Limited Been A Good Investment?

The return of -55% over three years would not have pleased NOVONIX Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. 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.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for NOVONIX that you should be aware of before investing.

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.

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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.