This article will reflect on the compensation paid to Ross Brown who has served as CEO of Inca Minerals Limited (ASX:ICG) since 2012. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
See our latest analysis for Inca Minerals
Comparing Inca Minerals Limited's CEO Compensation With the industry
Our data indicates that Inca Minerals Limited has a market capitalization of AU$20m, and total annual CEO compensation was reported as AU$277k for the year to June 2020. We note that's a decrease of 13% compared to last year. Notably, the salary which is AU$255.7k, represents most of the total compensation being paid.
For comparison, other companies in the industry with market capitalizations below AU$263m, reported a median total CEO compensation of AU$309k. This suggests that Inca Minerals remunerates its CEO largely in line with the industry average. Moreover, Ross Brown also holds AU$106k 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% |
Speaking on an industry level, nearly 70% of total compensation represents salary, while the remainder of 30% is other remuneration. According to our research, Inca Minerals has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Inca Minerals Limited's Growth Numbers
Inca Minerals Limited's earnings per share (EPS) grew 9.7% per year over the last three years. In the last year, its revenue is down 87%.
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. 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 Inca Minerals Limited Been A Good Investment?
Since shareholders would have lost about 40% over three years, some Inca Minerals Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
To Conclude...
As we touched on above, Inca Minerals Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. 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.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 4 warning signs for Inca Minerals you should be aware of, and 2 of them are potentially serious.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
If you’re looking to trade Inca Minerals, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted
New: AI Stock Screener & Alerts
Our new AI Stock Screener scans the market every day to uncover opportunities.
• Dividend Powerhouses (3%+ Yield)
• Undervalued Small Caps with Insider Buying
• High growth Tech and AI Companies
Or build your own from over 50 metrics.
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
