Stock Analysis

Our Take On Bougainville Copper's (ASX:BOC) CEO Salary

  •  Updated
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This article will reflect on the compensation paid to Mel Togolo who has served as CEO of Bougainville Copper Limited (ASX:BOC) since 2018. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Bougainville Copper.

See our latest analysis for Bougainville Copper

Comparing Bougainville Copper Limited's CEO Compensation With the industry

At the time of writing, our data shows that Bougainville Copper Limited has a market capitalization of AU$116m, and reported total annual CEO compensation of K739k for the year to December 2019. We note that's a decrease of 18% compared to last year. Notably, the salary which is K449.0k, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below AU$264m, we found that the median total CEO compensation was K823k. From this we gather that Mel Togolo is paid around the median for CEOs in the industry.

Component20192018Proportion (2019)
Salary K449k K604k 61%
Other K290k K300k 39%
Total CompensationK739k K904k100%

Speaking on an industry level, nearly 69% of total compensation represents salary, while the remainder of 31% is other remuneration. Bougainville Copper sets aside a smaller share of compensation for salary, in comparison to the overall industry. 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.

ASX:BOC CEO Compensation December 17th 2020

A Look at Bougainville Copper Limited's Growth Numbers

Bougainville Copper Limited has reduced its earnings per share by 11% a year over the last three years. It saw its revenue drop 30% over the last year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Bougainville Copper Limited Been A Good Investment?

With a total shareholder return of 7.4% over three years, Bougainville Copper Limited has done okay by shareholders. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

As we noted earlier, Bougainville Copper pays its CEO in line with similar-sized companies belonging to the same industry. Bougainville Copper has had a tough time in recent years, with declining EPS growth, and although shareholder returns are stable, they are hardly worth celebrating. This doesn't compare well with CEO compensation, which is largely in line with the industry median. Considering all of this, we can't say the CEO is underpaid, and moving forward shareholders will likely want to see higher growth to justify any raise.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Bougainville Copper you should be aware of, and 1 of them is potentially serious.

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