Simon Lawson has been the CEO of Firefly Resources Limited (ASX:FFR) since 2018, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Firefly Resources pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Firefly Resources Limited's CEO Compensation With the industry
According to our data, Firefly Resources Limited has a market capitalization of AU$40m, and paid its CEO total annual compensation worth AU$302k over the year to June 2020. Notably, that's an increase of 44% over the year before. In particular, the salary of AU$210.0k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below AU$258m, reported a median total CEO compensation of AU$309k. This suggests that Firefly Resources remunerates its CEO largely in line with the industry average. Furthermore, Simon Lawson directly owns AU$104k worth of shares in the company.
Speaking on an industry level, nearly 69% of total compensation represents salary, while the remainder of 31% is other remuneration. Although there is a difference in how total compensation is set, Firefly Resources more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Firefly Resources Limited's Growth Numbers
Firefly Resources Limited has seen its earnings per share (EPS) increase by 16% a year over the past three years. Revenue was pretty flat on last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Firefly Resources Limited Been A Good Investment?
Given the total shareholder loss of 75% over three years, many shareholders in Firefly Resources Limited are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we touched on above, Firefly Resources 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. On the other hand, the company has logged negative shareholder returns over the previous three years. However, EPS growth is positive over the same time frame. It's tough for us to say CEO compensation is too generous when EPS growth is positive, but negative investor returns will irk shareholders and reduce any chances of a raise.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 5 warning signs for Firefly Resources you should be aware of, and 3 of them are concerning.
Important note: Firefly 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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