Shareholders Will Probably Not Have Any Issues With Chalice Mining Limited's (ASX:CHN) CEO Compensation

The performance at Chalice Mining Limited (ASX:CHN) has been rather lacklustre of late and shareholders may be wondering what CEO Alex Dorsch is planning to do about this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 24 November 2021. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. In our opinion, CEO compensation does not look excessive and we discuss why.

See our latest analysis for Chalice Mining

Comparing Chalice Mining Limited's CEO Compensation With the industry

At the time of writing, our data shows that Chalice Mining Limited has a market capitalization of AU$3.5b, and reported total annual CEO compensation of AU$844k for the year to June 2021. We note that's an increase of 70% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$336k.

For comparison, other companies in the same industry with market capitalizations ranging between AU$2.7b and AU$8.8b had a median total CEO compensation of AU$2.2m. That is to say, Alex Dorsch is paid under the industry median. Furthermore, Alex Dorsch directly owns AU$58m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 59% of total compensation represents salary and 41% is other remuneration. It's interesting to note that Chalice Mining allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Chalice Mining Limited's Growth Numbers

Chalice Mining Limited has reduced its earnings per share by 57% a year over the last three years. It achieved revenue growth of 15% over the last year.

Overall this is not a very positive result for shareholders. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Chalice Mining Limited Been A Good Investment?

We think that the total shareholder return of 8,760%, over three years, would leave most Chalice Mining Limited shareholders smiling. 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 4 warning signs for Chalice Mining (1 is a bit unpleasant!) that you should be aware of before investing here.

Important note: Chalice Mining is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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