Increases to CEO Compensation Might Be Put On Hold For Now at Alkane Resources Limited (ASX:ALK)

Performance at Alkane Resources Limited (ASX:ALK) has been reasonably good and CEO Nic Earner has done a decent job of steering the company in the right direction. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 28 November 2022. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

Our analysis indicates that ALK is potentially undervalued!

How Does Total Compensation For Nic Earner Compare With Other Companies In The Industry?

According to our data, Alkane Resources Limited has a market capitalization of AU$365m, and paid its CEO total annual compensation worth AU$1.4m over the year to June 2022. That's mostly flat as compared to the prior year's compensation. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$625k.

For comparison, other companies in the same industry with market capitalizations ranging between AU$150m and AU$598m had a median total CEO compensation of AU$718k. Accordingly, our analysis reveals that Alkane Resources Limited pays Nic Earner north of the industry median. Moreover, Nic Earner also holds AU$3.1m worth of Alkane Resources 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	AU$625k	AU$577k	46%
Other	AU$734k	AU$759k	54%
Total Compensation	AU$1.4m	AU$1.3m	100%

Talking in terms of the industry, salary represented approximately 60% of total compensation out of all the companies we analyzed, while other remuneration made up 40% of the pie. In Alkane Resources' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Alkane Resources Limited's Growth Numbers

Over the past three years, Alkane Resources Limited has seen its earnings per share (EPS) grow by 37% per year. Its revenue is up 29% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. 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 Alkane Resources Limited Been A Good Investment?

Alkane Resources Limited has generated a total shareholder return of 26% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for Alkane Resources that investors should be aware of in a dynamic business environment.

Important note: Alkane Resources 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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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.