Is Beacon Minerals Limited (ASX:BCN) Excessively Paying Its CEO?

Graham McGarry became the CEO of Beacon Minerals Limited (ASX:BCN) in 2012. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Beacon Minerals

How Does Graham McGarry’s Compensation Compare With Similar Sized Companies?

Our data indicates that Beacon Minerals Limited is worth AU$86m, and total annual CEO compensation was reported as AU$164k for the year to June 2019. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at AU$150k. We looked at a group of companies with market capitalizations under AU$321m, and the median CEO total compensation was AU$388k.

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. Beacon Minerals pays out 91% of aggregate payment in the shape of a salary, which is significantly higher than the industry average.

At first glance this seems like a real positive for shareholders, since Graham McGarry is paid less than the average total compensation paid by similar sized companies. Though positive, it’s important we delve into the performance of the actual business. The graphic below shows how CEO compensation at Beacon Minerals has changed from year to year.

ASX:BCN CEO Compensation April 10th 2020
ASX:BCN CEO Compensation April 10th 2020

Is Beacon Minerals Limited Growing?

On average over the last three years, Beacon Minerals Limited has shrunk earnings per share by 74% each year (measured with a line of best fit). It achieved revenue growth of 299% over the last year.

Investors should note that, over three years, earnings per share are down. On the other hand, the strong revenue growth suggests the business is growing. These two metric are moving in different directions, so while it’s hard to be confident judging performance, we think the stock is worth watching. We don’t have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Beacon Minerals Limited Been A Good Investment?

Boasting a total shareholder return of 89% over three years, Beacon Minerals Limited has done well by shareholders. 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.

In Summary…

Beacon Minerals Limited is currently paying its CEO below what is normal for companies of its size.

Graham McGarry is paid less than what is normal at similar size companies, and the total shareholder return has been pleasing over the last three years. We would like to see EPS growth, but in our view it seems the CEO is modestly remunerated. CEO compensation is an important area to keep your eyes on, but we’ve also identified 6 warning signs for Beacon Minerals (1 shouldn’t be ignored!) that you should be aware of before investing here.

If you want to buy a stock that is better than Beacon Minerals, this free list of high return, low debt companies is a great place to look.

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.