This Is Why Shareholders Will Hold Back On A Pay Rise For Grange Resources Limited's (ASX:GRR) CEO This Year

Key Insights

• Grange Resources' Annual General Meeting to take place on 14th of May
• Total pay for CEO Honglin Zhao includes AU$591.1k salary
• Total compensation is similar to the industry average
• Over the past three years, Grange Resources' EPS fell by 9.7% and over the past three years, the total shareholder return was 3.8%

Share price growth at Grange Resources Limited (ASX:GRR) has remained rather flat over the last few years and it may be because earnings has struggled to grow at all. Some of these issues will occupy shareholders' minds as the AGM rolls around on 14th of May. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

View our latest analysis for Grange Resources

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

At the time of writing, our data shows that Grange Resources Limited has a market capitalization of AU$486m, and reported total annual CEO compensation of AU$912k for the year to December 2023. This means that the compensation hasn't changed much from last year. Notably, the salary which is AU$591.1k, represents most of the total compensation being paid.

For comparison, other companies in the Australian Metals and Mining industry with market capitalizations ranging between AU$302m and AU$1.2b had a median total CEO compensation of AU$1.0m. So it looks like Grange Resources compensates Honglin Zhao in line with the median for the industry. Moreover, Honglin Zhao also holds AU$726k worth of Grange Resources stock directly under their own name.

Component	2023	2022	Proportion (2023)
Salary	AU$591k	AU$558k	65%
Other	AU$320k	AU$363k	35%
Total Compensation	AU$912k	AU$921k	100%

On an industry level, roughly 64% of total compensation represents salary and 36% is other remuneration. There isn't a significant difference between Grange Resources and the broader market, in terms of salary allocation in the overall compensation package. 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.

A Look at Grange Resources Limited's Growth Numbers

Grange Resources Limited has reduced its earnings per share by 9.7% a year over the last three years. Its revenue is up 3.4% over the last year.

Overall this is not a very positive result for shareholders. The fairly low revenue growth fails to impress given that the EPS is down. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Grange Resources Limited Been A Good Investment?

With a total shareholder return of 3.8% over three years, Grange Resources Limited has done okay by shareholders, but there's always room for improvement. In light of that, investors might probably want to see an improvement on their returns before they feel generous about increasing the CEO remuneration.

In Summary...

While it's true that the share price growth hasn't been bad, it's hard to overlook the lack of earnings growth and this makes us question whether there will be any strong catalyst for the stock to improve. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Grange Resources that investors should think about before committing capital to this stock.

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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.