What We Learned About Lefroy Exploration's (ASX:LEX) CEO Compensation

Wade Johnson became the CEO of Lefroy Exploration Limited (ASX:LEX) in 2016, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Lefroy Exploration.

View our latest analysis for Lefroy Exploration

How Does Total Compensation For Wade Johnson Compare With Other Companies In The Industry?

Our data indicates that Lefroy Exploration Limited has a market capitalization of AU$24m, and total annual CEO compensation was reported as AU$283k for the year to June 2020. We note that's a decrease of 11% compared to last year. In particular, the salary of AU$220.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under AU$259m, the reported median total CEO compensation was AU$308k. So it looks like Lefroy Exploration compensates Wade Johnson in line with the median for the industry. What's more, Wade Johnson holds AU$862k worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Speaking on an industry level, nearly 69% of total compensation represents salary, while the remainder of 31% is other remuneration. Lefroy Exploration pays out 78% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Lefroy Exploration Limited's Growth

Over the last three years, Lefroy Exploration Limited has shrunk its earnings per share by 21% per year. It achieved revenue growth of 284% over the last year.

The decrease in EPS could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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?

Most shareholders would probably be pleased with Lefroy Exploration Limited for providing a total return of 41% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

As we noted earlier, Lefroy Exploration pays its CEO in line with similar-sized companies belonging to the same industry. The company has logged solid shareholder returns for the past three years. Revenues have also showed some positive momentum, recently. However, on a concerning note, EPS is not growing. Overall, the company's performance hasn't been that disappointing for us to object the CEO compensation.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 6 warning signs for Lefroy Exploration (of which 3 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Lefroy Exploration, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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