Here's Why Shareholders May Want To Be Cautious With Increasing BCI Minerals Limited's (ASX:BCI) CEO Pay Packet

Simply Wall St
November 18, 2021
Source: Shutterstock

CEO Alwyn Vorster has done a decent job of delivering relatively good performance at BCI Minerals Limited (ASX:BCI) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 25 November 2021. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

See our latest analysis for BCI Minerals

How Does Total Compensation For Alwyn Vorster Compare With Other Companies In The Industry?

At the time of writing, our data shows that BCI Minerals Limited has a market capitalization of AU$288m, and reported total annual CEO compensation of AU$960k for the year to June 2021. That's a notable increase of 35% on last year. We note that the salary of AU$499.3k makes up a sizeable portion of the total compensation received by the CEO.

On examining similar-sized companies in the industry with market capitalizations between AU$138m and AU$550m, we discovered that the median CEO total compensation of that group was AU$620k. Hence, we can conclude that Alwyn Vorster is remunerated higher than the industry median. Moreover, Alwyn Vorster also holds AU$2.5m worth of BCI Minerals stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20212020Proportion (2021)
Salary AU$499k AU$512k 52%
Other AU$460k AU$201k 48%
Total CompensationAU$960k AU$713k100%

Speaking on an industry level, nearly 59% of total compensation represents salary, while the remainder of 41% is other remuneration. In BCI Minerals' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ASX:BCI CEO Compensation November 18th 2021

BCI Minerals Limited's Growth

BCI Minerals Limited has seen its earnings per share (EPS) increase by 66% a year over the past three years. In the last year, its revenue is up 109%.

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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has BCI Minerals Limited Been A Good Investment?

We think that the total shareholder return of 263%, over three years, would leave most BCI Minerals Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for BCI Minerals (of which 2 are significant!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from BCI Minerals, 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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.