Stock Analysis

Shareholders May Be More Conservative With Mincor Resources NL's (ASX:MCR) CEO Compensation For Now

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ASX:MCR
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Despite strong share price growth of 289% for Mincor Resources NL (ASX:MCR) over the last few years, earnings growth has been disappointing, which suggests something is amiss. The upcoming AGM on 04 November 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

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Comparing Mincor Resources NL's CEO Compensation With the industry

At the time of writing, our data shows that Mincor Resources NL has a market capitalization of AU$664m, and reported total annual CEO compensation of AU$1.3m for the year to June 2021. We note that's an increase of 28% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$550k.

On comparing similar companies from the same industry with market caps ranging from AU$265m to AU$1.1b, we found that the median CEO total compensation was AU$894k. Accordingly, our analysis reveals that Mincor Resources NL pays David Southam north of the industry median.

Component20212020Proportion (2021)
Salary AU$550k AU$500k 42%
Other AU$747k AU$517k 58%
Total CompensationAU$1.3m AU$1.0m100%

On an industry level, around 60% of total compensation represents salary and 40% is other remuneration. In Mincor Resources' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ASX:MCR CEO Compensation October 28th 2021

A Look at Mincor Resources NL's Growth Numbers

Over the last three years, Mincor Resources NL has shrunk its earnings per share by 2.1% per year. In the last year, the company lost virtually all of its revenue.

Its a bit disappointing to see that the company has failed to grow its EPS. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Mincor Resources NL Been A Good Investment?

We think that the total shareholder return of 289%, over three years, would leave most Mincor Resources NL 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.

To Conclude...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 2 warning signs for Mincor Resources you should be aware of, and 1 of them is a bit unpleasant.

Important note: Mincor Resources is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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