How Should Investors React To Broken Hill Prospecting Limited's (ASX:BPL) CEO Pay?

Trangie Johnston has been the CEO of Broken Hill Prospecting Limited (ASX:BPL) since 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Broken Hill Prospecting

How Does Trangie Johnston's Compensation Compare With Similar Sized Companies?

According to our data, Broken Hill Prospecting Limited has a market capitalization of AU$3.7m, and paid its CEO total annual compensation worth AU$509k over the year to June 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$343k. We took a group of companies with market capitalizations below AU$292m, and calculated the median CEO total compensation to be AU$370k.

It would therefore appear that Broken Hill Prospecting Limited pays Trangie Johnston more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see, below, how CEO compensation at Broken Hill Prospecting has changed over time.

Is Broken Hill Prospecting Limited Growing?

Broken Hill Prospecting Limited has reduced its earnings per share by an average of 22% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is down -90%.

Sadly for shareholders, earnings per share are actually down, over three years. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO.

Has Broken Hill Prospecting Limited Been A Good Investment?

With a three year total loss of 67%, Broken Hill Prospecting Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared total CEO remuneration at Broken Hill Prospecting Limited with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

We think many shareholders would be underwhelmed with the business growth over the last three years. Arguably worse, investors are without a positive return for the last three years. Some might well form the view that the CEO is paid too generously! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Broken Hill Prospecting.

Important note: Broken Hill Prospecting may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.