Here's Why AusQuest Limited's (ASX:AQD) CEO Compensation Is The Least Of Shareholders Concerns

Key Insights

• AusQuest's Annual General Meeting to take place on 21st of November
• Salary of AU$200.0k is part of CEO Graeme Drew's total remuneration
• The total compensation is 43% less than the average for the industry
• Over the past three years, AusQuest's EPS grew by 48% and over the past three years, the total loss to shareholders 39%

Shareholders may be wondering what CEO Graeme Drew plans to do to improve the less than great performance at AusQuest Limited (ASX:AQD) recently. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 21st of November. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

View our latest analysis for AusQuest

Comparing AusQuest Limited's CEO Compensation With The Industry

Our data indicates that AusQuest Limited has a market capitalization of AU$9.1m, and total annual CEO compensation was reported as AU$221k for the year to June 2023. That is, the compensation was roughly the same as last year. In particular, the salary of AU$200.0k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the Australian Metals and Mining industry with market capitalizations below AU$314m, reported a median total CEO compensation of AU$389k. This suggests that Graeme Drew is paid below the industry median. Furthermore, Graeme Drew directly owns AU$213k worth of shares in the company.

Component	2023	2022	Proportion (2023)
Salary	AU$200k	AU$200k	90%
Other	AU$21k	AU$20k	10%
Total Compensation	AU$221k	AU$220k	100%

On an industry level, around 61% of total compensation represents salary and 39% is other remuneration. It's interesting to note that AusQuest pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at AusQuest Limited's Growth Numbers

AusQuest Limited has seen its earnings per share (EPS) increase by 48% a year over the past three years. Its revenue is up 69% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has AusQuest Limited Been A Good Investment?

With a total shareholder return of -39% over three years, AusQuest Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The fact that shareholders are sitting on a loss is certainly disheartening. The share price trend has diverged with the robust growth in EPS however, suggesting there may be other factors that could be driving the price performance. There needs to be more focus by management and the board to examine why the share price has diverged from fundamentals. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 4 warning signs for AusQuest that investors should be aware of in a dynamic business environment.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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.