Nic Earner has been the CEO of Alkane Resources Limited (ASX:ALK) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
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$491m, and paid its CEO total annual compensation worth AU$1.3m over the year to June 2020. Notably, that's an increase of 22% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$484k.
For comparison, other companies in the same industry with market capitalizations ranging between AU$262m and AU$1.0b had a median total CEO compensation of AU$952k. Hence, we can conclude that Nic Earner is remunerated higher than the industry median. Moreover, Nic Earner also holds AU$2.9m 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 | 2020 | 2019 | Proportion (2020) |
| Salary | AU$484k | AU$467k | 38% |
| Other | AU$800k | AU$582k | 62% |
| Total Compensation | AU$1.3m | AU$1.0m | 100% |
Speaking on an industry level, nearly 69% of total compensation represents salary, while the remainder of 31% 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.
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 51% per year. In the last year, its revenue is down 22%.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Alkane Resources Limited Been A Good Investment?
Boasting a total shareholder return of 264% over three years, Alkane Resources Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
To Conclude...
As we noted earlier, Alkane Resources pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Importantly though, EPS growth and shareholder returns are very impressive over the last three years. As a result of the excellent all-round performance of the company, we believe CEO compensation is fair. The pleasing shareholder returns are the cherry on top. We wouldn't be wrong in saying that shareholders feel that Nic's performance creates value for the company.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for Alkane Resources (1 can't be ignored!) that you should be aware of before investing here.
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. 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.
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About ASX:ALK
Alkane Resources
Operates as a gold exploration and production company in Australia.
High growth potential with excellent balance sheet.
