The Compensation For Lynas Rare Earths Limited's (ASX:LYC) CEO Looks Deserved And Here's Why

It would be hard to discount the role that CEO Amanda Lacaze has played in delivering the impressive results at Lynas Rare Earths Limited (ASX:LYC) recently. Coming up to the next AGM on 28 November 2022, shareholders would be keeping this in mind. This would also be a chance for them to hear the board review the financial results, discuss future company strategy and vote on any resolutions such as executive remuneration. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

View our latest analysis for Lynas Rare Earths

Comparing Lynas Rare Earths Limited's CEO Compensation With The Industry

Our data indicates that Lynas Rare Earths Limited has a market capitalization of AU$7.6b, and total annual CEO compensation was reported as AU$3.2m for the year to June 2022. That's a notable increase of 37% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$1.3m.

For comparison, other companies in the same industry with market capitalizations ranging between AU$6.0b and AU$18b had a median total CEO compensation of AU$4.0m. From this we gather that Amanda Lacaze is paid around the median for CEOs in the industry. Furthermore, Amanda Lacaze directly owns AU$23m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2022	2021	Proportion (2022)
Salary	AU$1.3m	AU$1.3m	42%
Other	AU$1.8m	AU$1.1m	58%
Total Compensation	AU$3.2m	AU$2.3m	100%

Talking in terms of the industry, salary represented approximately 60% of total compensation out of all the companies we analyzed, while other remuneration made up 40% of the pie. Lynas Rare Earths sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Lynas Rare Earths Limited's Growth

Lynas Rare Earths Limited's earnings per share (EPS) grew 68% per year over the last three years. It achieved revenue growth of 88% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Lynas Rare Earths Limited Been A Good Investment?

Boasting a total shareholder return of 285% over three years, Lynas Rare Earths 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...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Lynas Rare Earths that investors should look into moving forward.

Switching gears from Lynas Rare Earths, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.