Alex Molyneux has been the CEO of Galena Mining Limited (ASX:G1A) since 2018, and this article will examine the executive's compensation with respect to the overall performance of the company. 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 Galena Mining
Comparing Galena Mining Limited's CEO Compensation With the industry
Our data indicates that Galena Mining Limited has a market capitalization of AU$167m, and total annual CEO compensation was reported as AU$622k for the year to June 2020. Notably, that's a decrease of 37% over the year before. Notably, the salary which is AU$360.4k, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations under AU$259m, the reported median total CEO compensation was AU$309k. This suggests that Alex Molyneux is paid more than the median for the industry. Furthermore, Alex Molyneux directly owns AU$1.8m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$360k | AU$283k | 58% |
| Other | AU$262k | AU$712k | 42% |
| Total Compensation | AU$622k | AU$994k | 100% |
On an industry level, roughly 68% of total compensation represents salary and 32% is other remuneration. In Galena Mining's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. 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.
Galena Mining Limited's Growth
Over the last three years, Galena Mining Limited has shrunk its earnings per share by 23% per year. In the last year, its revenue is down 56%.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Galena Mining Limited Been A Good Investment?
Most shareholders would probably be pleased with Galena Mining Limited for providing a total return of 61% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
As we noted earlier, Galena Mining pays its CEO higher than the norm for similar-sized companies belonging to the same industry. The company isn't growing EPS, but shareholder returns have been impressive over the last three years. Considering positive investor returns, it would be bold of us to criticize CEO compensation, but shareholders might want to see healthier EPS growth before a raise is given out.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 4 warning signs for Galena Mining (2 shouldn't be ignored!) that you should be aware of before investing here.
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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About ASX:G1A
Galena Mining
Galena Mining Limited engages in the acquisition and exploration of mineral projects in Australia.
Medium and slightly overvalued.
