Does CI Resources' (ASX:CII) CEO Salary Compare Well With Industry Peers?

This article will reflect on the compensation paid to Ah Hong Lai who has served as CEO of CI Resources Limited (ASX:CII) since 2015. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for CI Resources

Comparing CI Resources Limited's CEO Compensation With the industry

At the time of writing, our data shows that CI Resources Limited has a market capitalization of AU$116m, and reported total annual CEO compensation of AU$884k for the year to June 2020. Notably, that's a decrease of 18% over the year before. Notably, the salary which is AU$619.5k, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below AU$257m, we found that the median total CEO compensation was AU$307k. This suggests that Ah Hong Lai is paid more than the median for the industry. What's more, Ah Hong Lai holds AU$2.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 69% of total compensation represents salary and 31% is other remuneration. Our data reveals that CI Resources allocates salary more or less in line with the wider market. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at CI Resources Limited's Growth Numbers

Over the last three years, CI Resources Limited has shrunk its earnings per share by 88% per year. It saw its revenue drop 7.5% over the last year.

The decline in EPS is a bit concerning. 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. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has CI Resources Limited Been A Good Investment?

Given the total shareholder loss of 41% over three years, many shareholders in CI Resources Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we touched on above, CI Resources Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Disappointingly, share price gains over the last three years have failed to materialize. Arguably worse, we've been waiting for positive EPS growth for the last three years. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 4 warning signs for CI Resources (1 doesn't sit too well with us!) that you should be aware of before investing here.

Important note: CI Resources 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.

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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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