Why Base Resources' (ASX:BSE) CEO Pay Matters

This article will reflect on the compensation paid to Tim Carstens who has served as CEO of Base Resources Limited (ASX:BSE) since 2008. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Base Resources

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

According to our data, Base Resources Limited has a market capitalization of AU$330m, and paid its CEO total annual compensation worth US$869k over the year to June 2020. That's a slight decrease of 3.4% on the prior year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$405k.

On comparing similar companies from the same industry with market caps ranging from AU$132m to AU$527m, we found that the median CEO total compensation was US$396k. Hence, we can conclude that Tim Carstens is remunerated higher than the industry median. Moreover, Tim Carstens also holds AU$2.0m worth of Base Resources stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 69% of total compensation represents salary and 31% is other remuneration. In Base Resources' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Base Resources Limited's Growth

Base Resources Limited's earnings per share (EPS) grew 16% per year over the last three years. The trailing twelve months of revenue was pretty much the same as the prior period.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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?

Base Resources Limited has generated a total shareholder return of 9.4% over three years, so most shareholders wouldn't be too disappointed. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

As we noted earlier, Base Resources pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, we must not forget that the EPS growth has been very strong over three years. Looking at the same time period, we think that the shareholder returns are respectable. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn't say CEO compensation problematic.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 2 warning signs for Base Resources (1 is concerning!) that you should be aware of before investing here.

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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