Stock Analysis

Here's Why Calidus Resources Limited's (ASX:CAI) CEO Compensation Is The Least Of Shareholders Concerns

ASX:CAI
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Shareholders may be wondering what CEO Dave Reeves plans to do to improve the less than great performance at Calidus Resources Limited (ASX:CAI) recently. At the next AGM coming up on 17 November 2021, they can influence managerial decision making through voting on resolutions, including executive remuneration. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We think CEO compensation looks appropriate given the data we have put together.

See our latest analysis for Calidus Resources

How Does Total Compensation For Dave Reeves Compare With Other Companies In The Industry?

According to our data, Calidus Resources Limited has a market capitalization of AU$234m, and paid its CEO total annual compensation worth AU$408k over the year to June 2021. That's a notable decrease of 21% on last year. In particular, the salary of AU$287.5k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between AU$136m and AU$543m had a median total CEO compensation of AU$602k. In other words, Calidus Resources pays its CEO lower than the industry median. Moreover, Dave Reeves also holds AU$12m worth of Calidus Resources stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20212020Proportion (2021)
Salary AU$288k AU$241k 70%
Other AU$120k AU$277k 30%
Total CompensationAU$408k AU$518k100%

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 Calidus Resources pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
ASX:CAI CEO Compensation November 10th 2021

A Look at Calidus Resources Limited's Growth Numbers

Calidus Resources Limited has reduced its earnings per share by 5.9% a year over the last three years. Its revenue is down 72% over the previous year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Calidus Resources Limited Been A Good Investment?

Boasting a total shareholder return of 83% over three years, Calidus Resources Limited has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us wonder if these strong returns can continue. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for Calidus Resources (2 are significant!) that you should be aware of before investing here.

Switching gears from Calidus Resources, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

Valuation is complex, but we're helping make it simple.

Find out whether Calidus Resources is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

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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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