This Is The Reason Why We Think Paladin Energy Ltd's (ASX:PDN) CEO Might Be Underpaid

The impressive results at Paladin Energy Ltd (ASX:PDN) recently will be great news for shareholders. At the upcoming AGM on 17 November 2022, they would be interested to hear about the company strategy going forward and get a chance to cast their votes on resolutions such as executive remuneration and other company matters. Let's take a look at why we think the CEO has done a good job and we'll present the case for a bump in pay.

View our latest analysis for Paladin Energy

Comparing Paladin Energy Ltd's CEO Compensation With The Industry

At the time of writing, our data shows that Paladin Energy Ltd has a market capitalization of AU$2.4b, and reported total annual CEO compensation of US$644k for the year to June 2022. Notably, that's a decrease of 38% over the year before. Notably, the salary which is US$406.0k, represents most of the total compensation being paid.

On comparing similar companies from the same industry with market caps ranging from AU$1.5b to AU$5.0b, we found that the median CEO total compensation was US$1.7m. This suggests that Ian Purdy is paid below the industry median. Moreover, Ian Purdy also holds AU$7.0m worth of Paladin Energy stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	US$406k	US$373k	63%
Other	US$238k	US$668k	37%
Total Compensation	US$644k	US$1.0m	100%

On an industry level, around 53% of total compensation represents salary and 47% is other remuneration. According to our research, Paladin Energy has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Paladin Energy Ltd's Growth

Paladin Energy Ltd's earnings per share (EPS) grew 24% per year over the last three years. In the last year, its revenue is up 57%.

This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Paladin Energy Ltd Been A Good Investment?

Most shareholders would probably be pleased with Paladin Energy Ltd for providing a total return of 835% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Seeing that company performance has been quite good recently, some shareholders may feel that CEO compensation may not be the biggest focus in the upcoming AGM. Seeing that earnings growth and share price performance seems to be on the right path, the more pressing focus for shareholders at the AGM may be how the board and management plans to turn the company into a sustainably profitable one.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for Paladin Energy that investors should be aware of in a dynamic business environment.

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.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.