Lefroy Exploration Limited's (ASX:LEX) CEO Might Not Expect Shareholders To Be So Generous This Year

Key Insights

• Lefroy Exploration's Annual General Meeting to take place on 4th of December
• CEO Wade Johnson's total compensation includes salary of AU$251.2k
• Total compensation is similar to the industry average
• Lefroy Exploration's three-year loss to shareholders was 16% while its EPS was down 49% over the past three years

Shareholders will probably not be too impressed with the underwhelming results at Lefroy Exploration Limited (ASX:LEX) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 4th of December. 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. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Lefroy Exploration

Comparing Lefroy Exploration Limited's CEO Compensation With The Industry

At the time of writing, our data shows that Lefroy Exploration Limited has a market capitalization of AU$30m, and reported total annual CEO compensation of AU$493k for the year to June 2023. We note that's an increase of 30% above last year. In particular, the salary of AU$251.2k, makes up a fairly large portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the Australian Metals and Mining industry with market capitalizations below AU$302m, we found that the median total CEO compensation was AU$386k. So it looks like Lefroy Exploration compensates Wade Johnson in line with the median for the industry. Moreover, Wade Johnson also holds AU$1.1m worth of Lefroy Exploration stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	AU$251k	AU$251k	51%
Other	AU$241k	AU$127k	49%
Total Compensation	AU$493k	AU$379k	100%

Speaking on an industry level, nearly 62% of total compensation represents salary, while the remainder of 38% is other remuneration. Lefroy Exploration pays a modest slice of remuneration through salary, as compared to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Lefroy Exploration Limited's Growth

Over the last three years, Lefroy Exploration Limited has shrunk its earnings per share by 49% per year. In the last year, the company lost virtually all of its revenue.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Lefroy Exploration Limited Been A Good Investment?

With a three year total loss of 16% for the shareholders, Lefroy Exploration Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 5 warning signs for Lefroy Exploration (3 make us uncomfortable!) that you should be aware of before investing here.

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.

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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.