Ardea Resources Limited's (ASX:ARL) CEO Will Probably Find It Hard To See A Huge Raise This Year

Shareholders of Ardea Resources Limited (ASX:ARL) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 29 November 2021. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

See our latest analysis for Ardea Resources

How Does Total Compensation For Andrew Penkethman Compare With Other Companies In The Industry?

Our data indicates that Ardea Resources Limited has a market capitalization of AU$69m, and total annual CEO compensation was reported as AU$441k for the year to June 2021. We note that's an increase of 16% above last year. In particular, the salary of AU$297.3k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below AU$276m, we found that the median total CEO compensation was AU$352k. From this we gather that Andrew Penkethman is paid around the median for CEOs in the industry.

Component	2021	2020	Proportion (2021)
Salary	AU$297k	AU$268k	67%
Other	AU$144k	AU$113k	33%
Total Compensation	AU$441k	AU$381k	100%

Talking in terms of the industry, salary represented approximately 59% of total compensation out of all the companies we analyzed, while other remuneration made up 41% of the pie. It's interesting to note that Ardea Resources pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Ardea Resources Limited's Growth

Ardea Resources Limited's earnings per share (EPS) grew 31% per year over the last three years. It achieved revenue growth of 76% 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Ardea Resources Limited Been A Good Investment?

With a three year total loss of 23% for the shareholders, Ardea Resources Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. 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.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 4 warning signs for Ardea Resources (of which 1 is potentially serious!) that you should know about in order to have a holistic understanding of the stock.

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.

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.

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