Increases to CEO Compensation Might Be Put On Hold For Now at Base Resources Limited (ASX:BSE)

Base Resources Limited (ASX:BSE) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 26 November 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for Base Resources

How Does Total Compensation For Tim Carstens Compare With Other Companies In The Industry?

Our data indicates that Base Resources Limited has a market capitalization of AU$356m, and total annual CEO compensation was reported as US$1.0m for the year to June 2021. We note that's an increase of 21% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$451k.

In comparison with other companies in the industry with market capitalizations ranging from AU$138m to AU$551m, the reported median CEO total compensation was US$441k. Hence, we can conclude that Tim Carstens is remunerated higher than the industry median. Moreover, Tim Carstens also holds AU$2.6m worth of Base Resources stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2021	2020	Proportion (2021)
Salary	US$451k	US$405k	43%
Other	US$598k	US$464k	57%
Total Compensation	US$1.0m	US$869k	100%

Talking in terms of the industry, salary represented approximately 59% of total compensation out of all the companies we analyzed, while other remuneration made up 41% of the pie. It's interesting to note that Base Resources allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Base Resources Limited's Growth

Base Resources Limited has reduced its earnings per share by 36% a year over the last three years. It saw its revenue drop 4.7% over the last year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Base Resources Limited Been A Good Investment?

We think that the total shareholder return of 68%, over three years, would leave most Base Resources Limited shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for Base Resources (1 is significant!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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