This article will reflect on the compensation paid to Alwyn Vorster who has served as CEO of BCI Minerals Limited (ASX:BCI) since 2016. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for BCI Minerals.
How Does Total Compensation For Alwyn Vorster Compare With Other Companies In The Industry?
Our data indicates that BCI Minerals Limited has a market capitalization of AU$174m, and total annual CEO compensation was reported as AU$713k for the year to June 2020. That's a notable increase of 12% on last year. In particular, the salary of AU$512.4k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below AU$258m, reported a median total CEO compensation of AU$305k. Hence, we can conclude that Alwyn Vorster is remunerated higher than the industry median. What's more, Alwyn Vorster holds AU$1.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Talking in terms of the industry, salary represented approximately 69% of total compensation out of all the companies we analyzed, while other remuneration made up 31% of the pie. BCI Minerals is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
BCI Minerals Limited's Growth
Over the last three years, BCI Minerals Limited has shrunk its earnings per share by 65% per year. Its revenue is up 41% over the last year.
The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 BCI Minerals Limited Been A Good Investment?
Boasting a total shareholder return of 88% over three years, BCI Minerals Limited has done well by shareholders. 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.
As we noted earlier, BCI Minerals pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But shareholder returns and revenue growth have been very healthy as we saw before. The only sore spot is EPS growth, which is negative over the same period. Although we would have liked to see EPS growth, positive shareholder returns, and growing revenues make us believe CEO compensation is reasonable.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 4 warning signs (and 1 which is concerning) in BCI Minerals we think you should know about.
Important note: BCI Minerals is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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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