Is Silver Lake Resources Limited’s (ASX:SLR) CEO Overpaid Relative To Its Peers?

Luke Tonkin has been the CEO of Silver Lake Resources Limited (ASX:SLR) since 2014. First, this article will compare CEO compensation with compensation at similar sized companies. 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 Silver Lake Resources

How Does Luke Tonkin’s Compensation Compare With Similar Sized Companies?

Our data indicates that Silver Lake Resources Limited is worth AU$1.7b, and total annual CEO compensation was reported as AU$1.4m for the year to June 2019. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at AU$683k. We examined companies with market caps from AU$628m to AU$2.5b, and discovered that the median CEO total compensation of that group was AU$1.7m.

Next, let’s break down remuneration compositions to understand how the industry and company compare with each other. Talking in terms of the sector, salary represented approximately 69% of total compensation out of all the companies we analysed, while other remuneration made up 31% of the pie. It’s interesting to note that Silver Lake Resources allocates a smaller portion of compensation to salary in comparison to the broader industry.

That means Luke Tonkin receives fairly typical remuneration for the CEO of a company that size. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance. You can see, below, how CEO compensation at Silver Lake Resources has changed over time.

ASX:SLR CEO Compensation April 27th 2020
ASX:SLR CEO Compensation April 27th 2020

Is Silver Lake Resources Limited Growing?

Silver Lake Resources Limited has seen earnings per share (EPS) move positively by an average of 54% a year, over the last three years (using a line of best fit). Its revenue is up 69% over last year.

This demonstrates that the company has been improving recently. A good result. It’s great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Shareholders might be interested in this free visualization of analyst forecasts.

Has Silver Lake Resources Limited Been A Good Investment?

I think that the total shareholder return of 318%, over three years, would leave most Silver Lake Resources Limited shareholders smiling. 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…

Luke Tonkin is paid around what is normal for the leaders of comparable size companies.

Few would be critical of the leadership, since returns have been juicy and earnings per share are moving in the right direction. So one could argue the CEO compensation is quite modest, if you consider company performance! On another note, we’ve spotted 3 warning signs for Silver Lake Resources that investors should look into moving forward.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

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