Stock Analysis

Here's What We Learned About The CEO Pay At Energy Resources of Australia Ltd (ASX:ERA)

  •  Updated
ASX:ERA
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This article will reflect on the compensation paid to Paul Arnold who has served as CEO of Energy Resources of Australia Ltd (ASX:ERA) since 2017. This analysis will also assess whether Energy Resources of Australia pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Energy Resources of Australia

How Does Total Compensation For Paul Arnold Compare With Other Companies In The Industry?

At the time of writing, our data shows that Energy Resources of Australia Ltd has a market capitalization of AU$738m, and reported total annual CEO compensation of AU$910k for the year to December 2019. That's just a smallish increase of 3.9% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$385k.

In comparison with other companies in the industry with market capitalizations ranging from AU$265m to AU$1.1b, the reported median CEO total compensation was AU$957k. This suggests that Energy Resources of Australia remunerates its CEO largely in line with the industry average.

Component20192018Proportion (2019)
Salary AU$385k AU$377k 42%
Other AU$525k AU$499k 58%
Total CompensationAU$910k AU$876k100%

Talking in terms of the industry, salary represented approximately 76% of total compensation out of all the companies we analyzed, while other remuneration made up 24% of the pie. Energy Resources of Australia sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ASX:ERA CEO Compensation December 15th 2020

Energy Resources of Australia Ltd's Growth

Energy Resources of Australia Ltd has seen its earnings per share (EPS) increase by 4.7% a year over the past three years. It saw its revenue drop 6.1% over the last year.

We would prefer it if there was revenue growth, but the modest improvement in EPS is good. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Energy Resources of Australia Ltd Been A Good Investment?

With a three year total loss of 68% for the shareholders, Energy Resources of Australia Ltd would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we noted earlier, Energy Resources of Australia pays its CEO in line with similar-sized companies belonging to the same industry. But with negative shareholder returns and unimpressive EPS growth, shareholders will surely be disturbed. CEO pay isn't exceptionally high, but considering poor performance, shareholders will likely hold off support for a raise until results improve.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for Energy Resources of Australia you should be aware of, and 1 of them is a bit concerning.

Switching gears from Energy Resources of Australia, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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