We Think Some Shareholders May Hesitate To Increase Alkane Resources Limited's (ASX:ALK) CEO Compensation

Key Insights

• Alkane Resources will host its Annual General Meeting on 21st of November
• Total pay for CEO Nic Earner includes AU$624.7k salary
• The overall pay is 39% above the industry average
• Alkane Resources' EPS grew by 42% over the past three years while total shareholder loss over the past three years was 37%

In the past three years, the share price of Alkane Resources Limited (ASX:ALK) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 21st of November could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out our latest analysis for Alkane Resources

Comparing Alkane Resources Limited's CEO Compensation With The Industry

Our data indicates that Alkane Resources Limited has a market capitalization of AU$380m, and total annual CEO compensation was reported as AU$1.3m for the year to June 2023. We note that's a small decrease of 6.6% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$625k.

In comparison with other companies in the Australian Metals and Mining industry with market capitalizations ranging from AU$157m to AU$628m, the reported median CEO total compensation was AU$911k. Accordingly, our analysis reveals that Alkane Resources Limited pays Nic Earner north of the industry median. What's more, Nic Earner holds AU$3.2m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	AU$625k	AU$625k	49%
Other	AU$645k	AU$734k	51%
Total Compensation	AU$1.3m	AU$1.4m	100%

On an industry level, around 61% of total compensation represents salary and 39% is other remuneration. Alkane Resources pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Alkane Resources Limited's Growth

Over the past three years, Alkane Resources Limited has seen its earnings per share (EPS) grow by 42% per year. In the last year, its revenue is up 15%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. 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?

Few Alkane Resources Limited shareholders would feel satisfied with the return of -37% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Alkane Resources that investors should look into moving forward.

Switching gears from Alkane 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.

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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.