We Discuss Why Iluka Resources Limited's (ASX:ILU) CEO Compensation May Be Closely Reviewed

Key Insights

• Iluka Resources' Annual General Meeting to take place on 2nd of May
• CEO Tom Patrick O’Leary's total compensation includes salary of AU$1.37m
• The total compensation is 127% higher than the average for the industry
• Iluka Resources' three-year loss to shareholders was 62% while its EPS was down 14% over the past three years

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Shareholders will probably not be too impressed with the underwhelming results at Iluka Resources Limited (ASX:ILU) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 2nd of May. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for Iluka Resources

Comparing Iluka Resources Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Iluka Resources Limited has a market capitalization of AU$1.6b, and reported total annual CEO compensation of AU$3.9m for the year to December 2024. That's slightly lower by 4.6% over the previous year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$1.4m.

In comparison with other companies in the Australian Metals and Mining industry with market capitalizations ranging from AU$626m to AU$2.5b, the reported median CEO total compensation was AU$1.7m. Accordingly, our analysis reveals that Iluka Resources Limited pays Tom Patrick O’Leary north of the industry median. Furthermore, Tom Patrick O’Leary directly owns AU$5.5m worth of shares in the company, implying that they are deeply invested in the company's success.

Speaking on an industry level, nearly 61% of total compensation represents salary, while the remainder of 39% is other remuneration. Iluka Resources sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Iluka Resources Limited's Growth Numbers

Over the last three years, Iluka Resources Limited has shrunk its earnings per share by 14% per year. In the last year, its revenue is down 9.3%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Iluka Resources Limited Been A Good Investment?

The return of -62% over three years would not have pleased Iluka Resources Limited shareholders. 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.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Iluka 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.