How Does Emerald Resources' (ASX:EMR) CEO Salary Compare to Peers?

Morgan Hart became the CEO of Emerald Resources NL (ASX:EMR) in 2014, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Emerald Resources

How Does Total Compensation For Morgan Hart Compare With Other Companies In The Industry?

According to our data, Emerald Resources NL has a market capitalization of AU$394m, and paid its CEO total annual compensation worth AU$323k over the year to June 2020. Notably, that's an increase of 95% over the year before. We note that the salary portion, which stands at AU$295.0k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations ranging from AU$258m to AU$1.0b, the reported median CEO total compensation was AU$819k. In other words, Emerald Resources pays its CEO lower than the industry median. Furthermore, Morgan Hart directly owns AU$30m worth of shares in the company, implying that they are deeply invested in the company's success.

Talking in terms of the industry, salary represented approximately 69% of total compensation out of all the companies we analyzed, while other remuneration made up 31% of the pie. Emerald Resources pays out 91% of remuneration in the form of a salary, significantly higher than the industry average. 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.

A Look at Emerald Resources NL's Growth Numbers

Emerald Resources NL has seen its earnings per share (EPS) increase by 30% a year over the past three years. Its revenue is down 3.8% over the previous year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Emerald Resources NL Been A Good Investment?

Boasting a total shareholder return of 96% over three years, Emerald Resources NL 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.

To Conclude...

As previously discussed, Morgan is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. Since EPS growth is heading in a positive direction; many would agree with our assessment that the pay is modest. Given the strong history of shareholder returns, the shareholders are probably very happy with Morgan's performance.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 3 warning signs (and 2 which are a bit concerning) in Emerald Resources we think you should know about.

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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