How Does Liontown Resources' (ASX:LTR) CEO Salary Compare to Peers?

This article will reflect on the compensation paid to David Richards who has served as CEO of Liontown Resources Limited (ASX:LTR) since 2010. This analysis will also assess whether Liontown Resources pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Liontown Resources

Comparing Liontown Resources Limited's CEO Compensation With the industry

Our data indicates that Liontown Resources Limited has a market capitalization of AU$750m, and total annual CEO compensation was reported as AU$556k for the year to June 2020. Notably, that's an increase of 42% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$243k.

In comparison with other companies in the industry with market capitalizations ranging from AU$260m to AU$1.0b, the reported median CEO total compensation was AU$950k. This suggests that David Richards is paid below the industry median. Furthermore, David Richards directly owns AU$8.5m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 69% of total compensation represents salary and 31% is other remuneration. Liontown 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 Liontown Resources Limited's Growth Numbers

Over the last three years, Liontown Resources Limited has shrunk its earnings per share by 54% per year. Its revenue is down 63% over the previous year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Liontown Resources Limited Been A Good Investment?

We think that the total shareholder return of 785%, over three years, would leave most Liontown Resources Limited shareholders smiling. 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.

In Summary...

As we touched on above, Liontown Resources Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. And while EPS growth is negative, shareholder returns have been healthy recently. We would like to see EPS growth, but in our view CEO compensation is modest.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 5 warning signs for Liontown Resources (3 don't sit too well with us!) that you should be aware of before investing here.

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.

If you decide to trade Liontown Resources, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.