Why We Think Shareholders May Be Considering Bumping Up Emerald Resources NL's (ASX:EMR) CEO Compensation

Shareholders will be pleased by the impressive results for Emerald Resources NL (ASX:EMR) recently and CEO Morgan Hart has played a key role. This would be kept in mind at the upcoming AGM on 24 November 2022 which will be a chance for them to hear the board review the financial results, discuss future company strategy and vote on resolutions such as executive remuneration and other matters. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

Check out the opportunities and risks within the AU Metals and Mining industry.

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$685m, and paid its CEO total annual compensation worth AU$581k over the year to June 2022. We note that's an increase of 62% above last year. We note that the salary portion, which stands at AU$471.4k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the same industry with market capitalizations ranging between AU$296m and AU$1.2b had a median total CEO compensation of AU$1.1m. This suggests that Morgan Hart is paid below the industry median. What's more, Morgan Hart holds AU$45m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2022	2021	Proportion (2022)
Salary	AU$471k	AU$301k	81%
Other	AU$109k	AU$56k	19%
Total Compensation	AU$581k	AU$357k	100%

On an industry level, roughly 60% of total compensation represents salary and 40% is other remuneration. It's interesting to note that Emerald Resources pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Emerald Resources NL's Growth

Over the past three years, Emerald Resources NL has seen its earnings per share (EPS) grow by 84% per year. In the last year, its revenue is up 983,386%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. 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 Emerald Resources NL Been A Good Investment?

We think that the total shareholder return of 196%, over three years, would leave most Emerald Resources NL shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Given the improved performance, shareholders may be more forgiving of CEO compensation in the upcoming AGM. In saying that, some shareholders may feel that the more important issues to be addressed may be how the management plans to steer the company towards sustainable profitability in the future.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Emerald Resources that you should be aware of before investing.

Important note: Emerald 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. 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.