Shareholders Will Probably Not Have Any Issues With Genesis Minerals Limited's (ASX:GMD) CEO Compensation

Simply Wall St
November 12, 2021
Source: Shutterstock

Performance at Genesis Minerals Limited (ASX:GMD) has been rather uninspiring recently and shareholders may be wondering how CEO Michael Fowler plans to fix this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 19 November 2021. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We think CEO compensation looks appropriate given the data we have put together.

Check out our latest analysis for Genesis Minerals

Comparing Genesis Minerals Limited's CEO Compensation With the industry

Our data indicates that Genesis Minerals Limited has a market capitalization of AU$311m, and total annual CEO compensation was reported as AU$386k for the year to June 2021. That's a notable increase of 27% on last year. In particular, the salary of AU$275.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations ranging from AU$137m to AU$548m, the reported median CEO total compensation was AU$634k. That is to say, Michael Fowler is paid under the industry median. Moreover, Michael Fowler also holds AU$2.6m worth of Genesis Minerals stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20212020Proportion (2021)
Salary AU$275k AU$268k 71%
Other AU$111k AU$36k 29%
Total CompensationAU$386k AU$304k100%

On an industry level, roughly 59% of total compensation represents salary and 41% is other remuneration. According to our research, Genesis Minerals has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ASX:GMD CEO Compensation November 12th 2021

Genesis Minerals Limited's Growth

Over the last three years, Genesis Minerals Limited has shrunk its earnings per share by 1.2% per year. It achieved revenue growth of 12% over the last year.

A lack of EPS improvement is not good to see. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Genesis Minerals Limited Been A Good Investment?

Boasting a total shareholder return of 377% over three years, Genesis Minerals Limited has done well by shareholders. 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.

To Conclude...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 4 warning signs for Genesis Minerals (2 are potentially serious!) that you should be aware of before investing here.

Important note: Genesis Minerals 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.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.