It Looks Like Shareholders Would Probably Approve Grange Resources Limited's (ASX:GRR) CEO Compensation Package

The performance at Grange Resources Limited (ASX:GRR) has been quite strong recently and CEO Honglin Zhao has played a role in it. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 24 May 2021. The focus will probably be on the future company strategy as shareholders cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.

View our latest analysis for Grange Resources

How Does Total Compensation For Honglin Zhao Compare With Other Companies In The Industry?

Our data indicates that Grange Resources Limited has a market capitalization of AU$596m, and total annual CEO compensation was reported as AU$888k for the year to December 2020. This means that the compensation hasn't changed much from last year. In particular, the salary of AU$526.7k, makes up a fairly large portion of the total compensation being paid to the CEO.

On comparing similar companies from the same industry with market caps ranging from AU$257m to AU$1.0b, we found that the median CEO total compensation was AU$927k. This suggests that Grange Resources remunerates its CEO largely in line with the industry average. What's more, Honglin Zhao holds AU$682k worth of shares in the company in their own name.

Component	2020	2019	Proportion (2020)
Salary	AU$527k	AU$512k	59%
Other	AU$361k	AU$400k	41%
Total Compensation	AU$888k	AU$911k	100%

Speaking on an industry level, nearly 69% of total compensation represents salary, while the remainder of 31% is other remuneration. Grange Resources sets aside a smaller share of compensation for salary, in comparison to the overall 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.

Grange Resources Limited's Growth

Grange Resources Limited's earnings per share (EPS) grew 50% per year over the last three years. In the last year, its revenue is up 43%.

Shareholders would be glad to know that the company has improved itself over the last few years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Grange Resources Limited Been A Good Investment?

Most shareholders would probably be pleased with Grange Resources Limited for providing a total return of 290% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Grange Resources that you should be aware of before investing.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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