Why We Think The CEO Of Lotus Resources Limited (ASX:LOT) May Soon See A Pay Rise

Key Insights

• Lotus Resources will host its Annual General Meeting on 28th of November
• Salary of AU$372.5k is part of CEO Keith Bowes's total remuneration
• Total compensation is 31% below industry average
• Over the past three years, Lotus Resources' EPS grew by 61% and over the past three years, the total shareholder return was 218%

The solid performance at Lotus Resources Limited (ASX:LOT) has been impressive and shareholders will probably be pleased to know that CEO Keith Bowes has delivered. This would be kept in mind at the upcoming AGM on 28th of November which will be a chance for them to hear the board review the financial results, discuss future company strategy and vote on resolutions such as executive remuneration and other matters. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

Check out our latest analysis for Lotus Resources

How Does Total Compensation For Keith Bowes Compare With Other Companies In The Industry?

Our data indicates that Lotus Resources Limited has a market capitalization of AU$516m, and total annual CEO compensation was reported as AU$815k for the year to June 2023. Notably, that's a decrease of 30% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$373k.

On examining similar-sized companies in the Australian Metals and Mining industry with market capitalizations between AU$305m and AU$1.2b, we discovered that the median CEO total compensation of that group was AU$1.2m. That is to say, Keith Bowes is paid under the industry median. Furthermore, Keith Bowes directly owns AU$1.2m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	AU$373k	AU$265k	46%
Other	AU$442k	AU$894k	54%
Total Compensation	AU$815k	AU$1.2m	100%

Speaking on an industry level, nearly 61% of total compensation represents salary, while the remainder of 39% is other remuneration. Lotus Resources pays a modest slice of remuneration through salary, as compared to the broader 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 Lotus Resources Limited's Growth Numbers

Over the past three years, Lotus Resources Limited has seen its earnings per share (EPS) grow by 61% per year. It saw its revenue drop 39% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. 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 Lotus Resources Limited Been A Good Investment?

Boasting a total shareholder return of 218% over three years, Lotus Resources Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Some shareholders will probably be more lenient on CEO compensation in the upcoming AGM given the pleasing performance of the company recently. In saying that, some shareholders may feel that the more important issues to be addressed may be how the management plans to steer the company towards sustainable profitability in the future.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which is significant) in Lotus Resources we think you should know about.

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.