How Should Investors Feel About Broken Hill Prospecting Limited’s (ASX:BPL) CEO Pay?

Trangie Johnston has been the CEO of Broken Hill Prospecting Limited (ASX:BPL) since 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Broken Hill Prospecting

How Does Trangie Johnston’s Compensation Compare With Similar Sized Companies?

Our data indicates that Broken Hill Prospecting Limited is worth AU$2.8m, and total annual CEO compensation is AU$509k. (This figure is for the year to June 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at AU$343k. We looked at a group of companies with market capitalizations under AU$279m, and the median CEO total compensation was AU$354k.

As you can see, Trangie Johnston is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Broken Hill Prospecting Limited is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at Broken Hill Prospecting, below.

ASX:BPL CEO Compensation, April 18th 2019
ASX:BPL CEO Compensation, April 18th 2019

Is Broken Hill Prospecting Limited Growing?

Broken Hill Prospecting Limited has reduced its earnings per share by an average of 22% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is down -90%.

Few shareholders would be pleased to read that earnings per share are lower over three years. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. 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 Broken Hill Prospecting Limited Been A Good Investment?

Given the total loss of 75% over three years, many shareholders in Broken Hill Prospecting Limited are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

We compared the total CEO remuneration paid by Broken Hill Prospecting Limited, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

Over the same period, investors would have come away with nothing in the way of share price gains. In our opinion the CEO might be paid too generously! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Broken Hill Prospecting.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

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.

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. Thank you for reading.