Ross Brown became the CEO of Inca Minerals Limited (ASX:ICG) in 2012, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for Inca Minerals
Comparing Inca Minerals Limited's CEO Compensation With the industry
At the time of writing, our data shows that Inca Minerals Limited has a market capitalization of AU$12m, and reported total annual CEO compensation of AU$277k for the year to June 2020. That's a notable decrease of 13% on last year. We note that the salary portion, which stands at AU$255.7k constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations under AU$275m, the reported median total CEO compensation was AU$300k. This suggests that Inca Minerals remunerates its CEO largely in line with the industry average. Moreover, Ross Brown also holds AU$116k worth of Inca Minerals stock directly under their own name.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$256k | AU$256k | 92% |
| Other | AU$21k | AU$62k | 8% |
| Total Compensation | AU$277k | AU$318k | 100% |
On an industry level, around 69% of total compensation represents salary and 31% is other remuneration. Inca Minerals is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Inca Minerals Limited's Growth
Inca Minerals Limited has seen its earnings per share (EPS) increase by 9.7% a year over the past three years. Its revenue is down 87% over the previous year.
We generally like to see a little revenue growth, but it is good to see a modest EPS growth at least. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Inca Minerals Limited Been A Good Investment?
Since shareholders would have lost about 54% over three years, some Inca Minerals Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.
In Summary...
As we noted earlier, Inca Minerals pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, Inca Minerals is suffering from adverse shareholder returns and althoughEPS have grown over the past three years, they have not been extraordinary. We'd stop short of saying CEO compensation is inappropriate, but without an improvement in performance, it's sure to draw criticism. Shareholders will also not want to see performance improving before agreeing to any raise.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 2 which are concerning) in Inca Minerals we think you should know about.
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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About ASX:ICG
Inca Minerals
A junior resource company, engages in the acquisition, exploration, evaluation, and development of mineral properties in Australia.
Flawless balance sheet moderate.
