Shareholders May Be Wary Of Increasing Gullewa Limited's (ASX:GUL) CEO Compensation Package

Key Insights

• Gullewa's Annual General Meeting to take place on 30th of November
• Salary of AU$290.7k is part of CEO David Deitz's total remuneration
• The total compensation is similar to the average for the industry
• Gullewa's three-year loss to shareholders was 48% while its EPS was down 15% over the past three years

The results at Gullewa Limited (ASX:GUL) have been quite disappointing recently and CEO David Deitz bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 30th of November. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Check out our latest analysis for Gullewa

How Does Total Compensation For David Deitz Compare With Other Companies In The Industry?

At the time of writing, our data shows that Gullewa Limited has a market capitalization of AU$11m, and reported total annual CEO compensation of AU$448k for the year to June 2023. That's mostly flat as compared to the prior year's compensation. In particular, the salary of AU$290.7k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Australian Metals and Mining industry with market capitalizations under AU$305m, the reported median total CEO compensation was AU$384k. So it looks like Gullewa compensates David Deitz in line with the median for the industry. What's more, David Deitz holds AU$2.7m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	AU$291k	AU$230k	65%
Other	AU$158k	AU$216k	35%
Total Compensation	AU$448k	AU$446k	100%

On an industry level, around 61% of total compensation represents salary and 39% is other remuneration. Gullewa is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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.

Gullewa Limited's Growth

Gullewa Limited has reduced its earnings per share by 15% a year over the last three years. In the last year, its revenue is down 5.5%.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Gullewa Limited Been A Good Investment?

Few Gullewa Limited shareholders would feel satisfied with the return of -48% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

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 5 warning signs for Gullewa (3 can't be ignored!) that you should be aware of before investing here.

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.