We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Alkane Resources Limited's (ASX:ALK) CEO For Now

By
Simply Wall St
Published
November 10, 2021
ASX:ALK
Source: Shutterstock

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. As shareholders go into the upcoming AGM on 17 November 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

Check out our latest analysis for Alkane Resources

Comparing Alkane Resources Limited's CEO Compensation With the industry

According to our data, Alkane Resources Limited has a market capitalization of AU$557m, and paid its CEO total annual compensation worth AU$1.3m over the year to June 2021. That's a modest increase of 4.1% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$577k.

For comparison, other companies in the same industry with market capitalizations ranging between AU$272m and AU$1.1b had a median total CEO compensation of AU$936k. This suggests that Nic Earner is paid more than the median for the industry. Moreover, Nic Earner also holds AU$3.4m worth of Alkane Resources stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20212020Proportion (2021)
Salary AU$577k AU$484k 43%
Other AU$759k AU$800k 57%
Total CompensationAU$1.3m AU$1.3m100%

On an industry level, roughly 59% of total compensation represents salary and 41% is other remuneration. It's interesting to note that Alkane Resources allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ASX:ALK CEO Compensation November 10th 2021

Alkane Resources Limited's Growth

Alkane Resources Limited's earnings per share (EPS) grew 5.2% per year over the last three years. Its revenue is up 76% over the last year.

It's great to see that revenue growth is strong. And in that context, the modest EPS improvement certainly isn't shabby. We wouldn't say this is necessarily top notch growth, but it is certainly promising. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Alkane Resources Limited Been A Good Investment?

Most shareholders would probably be pleased with Alkane Resources Limited for providing a total return of 435% over three years. 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.

To Conclude...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 2 warning signs for Alkane Resources (1 doesn't sit too well with us!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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