Shareholders will probably not be disappointed by the robust results at Energy Metals Limited (ASX:EME) recently and they will be keeping this in mind as they go into the AGM on 28 May 2021. This would also be a chance for them to hear the board review the financial results, discuss future company strategy to further improve the business and vote on any resolutions such as executive remuneration. We have prepared some analysis below and we show why we think CEO compensation looks decent with even the possibility for a raise.
Comparing Energy Metals Limited's CEO Compensation With the industry
At the time of writing, our data shows that Energy Metals Limited has a market capitalization of AU$43m, and reported total annual CEO compensation of AU$194k for the year to December 2020. This was the same as last year. Notably, the salary which is AU$180.0k, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations under AU$257m, the reported median total CEO compensation was AU$325k. In other words, Energy Metals pays its CEO lower than the industry median.
On an industry level, roughly 68% of total compensation represents salary and 32% is other remuneration. According to our research, Energy Metals has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at Energy Metals Limited's Growth Numbers
Over the past three years, Energy Metals Limited has seen its earnings per share (EPS) grow by 3.6% per year. Its revenue is down 18% over the previous year.
We would argue that the lack of revenue growth in the last year is less than ideal, but the modest EPS growth gives us some relief. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Energy Metals Limited Been A Good Investment?
Boasting a total shareholder return of 86% over three years, Energy Metals Limited has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
While the company seems to be headed in the right direction performance-wise, there's always room for improvement. If it manages to keep up the current streak, CEO remuneration could well be one of shareholders' least concerns. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 3 warning signs (and 1 which can't be ignored) in Energy Metals we think you should know about.
Important note: Energy Metals is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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