Should You Worry About Avesoro Resources Inc.’s (TSE:ASO) CEO Pay Cheque?

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Serhan Umurhan became the CEO of Avesoro Resources Inc. (TSE:ASO) in 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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 process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Avesoro Resources

How Does Serhan Umurhan’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Avesoro Resources Inc. has a market cap of CA$68m, and is paying total annual CEO compensation of US$715k. (This figure is for the year to December 2018). That’s just a smallish increase of 4.0% on last year. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$495k. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO total compensation in that group is US$114k.

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

The graphic below shows how CEO compensation at Avesoro Resources has changed from year to year.

TSX:ASO CEO Compensation, June 19th 2019
TSX:ASO CEO Compensation, June 19th 2019

Is Avesoro Resources Inc. Growing?

Avesoro Resources Inc. has increased its earnings per share (EPS) by an average of 104% a year, over the last three years (using a line of best fit). It achieved revenue growth of 48% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. You might want to check this free visual report on analyst forecasts for future earnings.

Has Avesoro Resources Inc. Been A Good Investment?

Given the total loss of 89% over three years, many shareholders in Avesoro Resources Inc. 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 total CEO remuneration at Avesoro Resources Inc. with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Avesoro Resources.

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.