Shareholders May Not Be So Generous With Bass Metals Limited's (ASX:BSM) CEO Compensation And Here's Why

In the past three years, the share price of Bass Metals Limited (ASX:BSM) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 15 March 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

See our latest analysis for Bass Metals

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

At the time of writing, our data shows that Bass Metals Limited has a market capitalization of AU$24m, and reported total annual CEO compensation of AU$304k for the year to June 2020. We note that's a decrease of 14% compared to last year. Notably, the salary which is AU$277.5k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under AU$261m, the reported median total CEO compensation was AU$311k. So it looks like Bass Metals compensates Tim McManus in line with the median for the industry. Moreover, Tim McManus also holds AU$128k worth of Bass Metals stock directly under their own name.

Component	2020	2019	Proportion (2020)
Salary	AU$278k	AU$305k	91%
Other	AU$26k	AU$48k	9%
Total Compensation	AU$304k	AU$353k	100%

On an industry level, around 68% of total compensation represents salary and 32% is other remuneration. Bass Metals pays out 91% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Bass Metals Limited's Growth Numbers

Bass Metals Limited's earnings per share (EPS) grew 25% per year over the last three years. Its revenue is up 6.8% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Bass Metals Limited Been A Good Investment?

With a total shareholder return of -73% over three years, Bass Metals Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 6 warning signs (and 2 which can't be ignored) in Bass Metals we think you should know about.

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.

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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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