Michael Fowler has been the CEO of Genesis Minerals Limited (ASX:GMD) since 2007, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Genesis Minerals pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
See our latest analysis for Genesis Minerals
Comparing Genesis Minerals Limited's CEO Compensation With the industry
At the time of writing, our data shows that Genesis Minerals Limited has a market capitalization of AU$136m, and reported total annual CEO compensation of AU$304k for the year to June 2020. That's mostly flat as compared to the prior year's compensation. In particular, the salary of AU$268.4k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the industry with market capitalizations below AU$258m, we found that the median total CEO compensation was AU$309k. This suggests that Genesis Minerals remunerates its CEO largely in line with the industry average. What's more, Michael Fowler holds AU$1.1m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$268k | AU$248k | 88% |
| Other | AU$36k | AU$66k | 12% |
| Total Compensation | AU$304k | AU$314k | 100% |
On an industry level, around 69% of total compensation represents salary and 31% is other remuneration. Genesis Minerals pays out 88% of remuneration in the form of a salary, significantly higher than the industry average. 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 Genesis Minerals Limited's Growth Numbers
Genesis Minerals Limited has reduced its earnings per share by 28% a year over the last three years. It achieved revenue growth of 11% over the last year.
The decline in EPS is a bit concerning. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. 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 Genesis Minerals Limited Been A Good Investment?
Most shareholders would probably be pleased with Genesis Minerals Limited for providing a total return of 62% 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 touched on above, Genesis Minerals 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. This doesn't look good when you see that EPS growth over the last three years has been negative. But on the bright side, shareholder returns have moved northward during the same period. We're not saying CEO compensation is too generous, but shareholders might think performance needs to be improved before paying any more.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for Genesis Minerals (2 don't sit too well with us!) that you should be aware of before investing here.
Switching gears from Genesis Minerals, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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:GMD
Genesis Minerals
Engages in the exploration, production, and development of gold deposits in Western Australia.
Excellent balance sheet with reasonable growth potential.
