Tom Revy became the CEO of BlackEarth Minerals NL (ASX:BEM) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether BlackEarth Minerals pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
How Does Total Compensation For Tom Revy Compare With Other Companies In The Industry?
At the time of writing, our data shows that BlackEarth Minerals NL has a market capitalization of AU$8.2m, and reported total annual CEO compensation of AU$370k for the year to June 2020. We note that's a small decrease of 5.8% on last year. We note that the salary portion, which stands at AU$250.0k constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations under AU$257m, the reported median total CEO compensation was AU$307k. From this we gather that Tom Revy is paid around the median for CEOs in the industry. What's more, Tom Revy holds AU$284k worth of shares in the company in their own name.
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. Although there is a difference in how total compensation is set, BlackEarth Minerals more or less reflects the market in terms of setting the salary. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at BlackEarth Minerals NL's Growth Numbers
BlackEarth Minerals NL has reduced its earnings per share by 11% a year over the last three years. In the last year, its revenue is up 6.1%.
Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has BlackEarth Minerals NL Been A Good Investment?
Given the total shareholder loss of 78% over three years, many shareholders in BlackEarth Minerals NL are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we touched on above, BlackEarth Minerals NL is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Meanwhile, EPS growth and shareholder returns have been in the red for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 3 which are concerning) in BlackEarth Minerals we think you should know about.
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. 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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