Stock Analysis

What Does Castle Minerals' (ASX:CDT) CEO Pay Reveal?

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Stephen Stone has been the CEO of Castle Minerals Limited (ASX:CDT) since 2016, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Castle Minerals pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Castle Minerals

Comparing Castle Minerals Limited's CEO Compensation With the industry

Our data indicates that Castle Minerals Limited has a market capitalization of AU$7.3m, and total annual CEO compensation was reported as AU$226k for the year to June 2020. Notably, that's an increase of 74% over the year before. Notably, the salary which is AU$156.6k, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below AU$254m, we found that the median total CEO compensation was AU$310k. So it looks like Castle Minerals compensates Stephen Stone in line with the median for the industry. What's more, Stephen Stone holds AU$520k worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary AU$157k AU$119k 69%
Other AU$69k AU$11k 31%
Total CompensationAU$226k AU$130k100%

Talking in terms of the industry, salary represented approximately 68% of total compensation out of all the companies we analyzed, while other remuneration made up 32% of the pie. There isn't a significant difference between Castle Minerals and the broader market, in terms of salary allocation in the overall compensation package. 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:CDT CEO Compensation February 23rd 2021

Castle Minerals Limited's Growth

Castle Minerals Limited's earnings per share (EPS) grew 25% per year over the last three years. In the last year, its revenue is down 88%.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. 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 Castle Minerals Limited Been A Good Investment?

With a three year total loss of 62% for the shareholders, Castle Minerals Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we touched on above, Castle Minerals Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. At the same time, the company has logged negative shareholder returns over the last three years. But on the bright side, EPS growth is positive over the same period. Considering positive EPS growth, we'd say compensation is fair, but shareholders may be wary of a bump in pay before the company logs positive returns.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 5 warning signs for Castle Minerals (4 don't sit too well with us!) 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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