Peter Schwann became the CEO of Aruma Resources Limited (ASX:AAJ) in 2010, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
View our latest analysis for Aruma Resources
Comparing Aruma Resources Limited's CEO Compensation With the industry
According to our data, Aruma Resources Limited has a market capitalization of AU$11m, and paid its CEO total annual compensation worth AU$105k over the year to June 2020. We note that's a decrease of 52% compared to last year. We note that the salary portion, which stands at AU$95.8k constitutes the majority of total compensation received by the CEO.
On comparing similar-sized companies in the industry with market capitalizations below AU$259m, we found that the median total CEO compensation was AU$308k. That is to say, Peter Schwann is paid under the industry median. What's more, Peter Schwann holds AU$167k worth of shares in the company in their own name.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$96k | AU$200k | 91% |
| Other | AU$9.1k | AU$19k | 9% |
| Total Compensation | AU$105k | AU$219k | 100% |
Speaking on an industry level, nearly 69% of total compensation represents salary, while the remainder of 31% is other remuneration. According to our research, Aruma Resources has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Aruma Resources Limited's Growth Numbers
Aruma Resources Limited has seen its earnings per share (EPS) increase by 29% a year over the past three years. Its revenue is up 22% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Aruma Resources Limited Been A Good Investment?
With a three year total loss of 82% for the shareholders, Aruma Resources Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
In Summary...
As we touched on above, Aruma Resources Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. However we must not forget that the EPS growth has been very strong over three years. Considering EPS are on the up, we would say Peter is compensated fairly. But shareholders will likely want to hold off on any raise for Peter until investor returns are positive.
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 5 warning signs for Aruma Resources you should be aware of, and 4 of them are potentially serious.
Switching gears from Aruma Resources, 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.
If you’re looking to trade Aruma Resources, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted
New: Manage All Your Stock Portfolios in One Place
We've created the ultimate portfolio companion for stock investors, and it's free.
• Connect an unlimited number of Portfolios and see your total in one currency
• Be alerted to new Warning Signs or Risks via email or mobile
• Track the Fair Value of your stocks
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. 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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
About ASX:AAJ
Flawless balance sheet moderate.
