It's Unlikely That The CEO Of Mount Gibson Iron Limited (ASX:MGX) Will See A Huge Pay Rise This Year

Key Insights

• Mount Gibson Iron to hold its Annual General Meeting on 15th of November
• CEO Peter Kerr's total compensation includes salary of AU$722.5k
• The total compensation is similar to the average for the industry
• Mount Gibson Iron's three-year loss to shareholders was 22% while its EPS was down 61% over the past three years

The underwhelming share price performance of Mount Gibson Iron Limited (ASX:MGX) in the past three years would have disappointed many shareholders. Per share earnings growth is also lacking, despite revenue growth. In light of this performance, shareholders will have a chance to question the board in the upcoming AGM on 15th of November, where they can impact on future company performance by voting on resolutions, including executive compensation. Here's our take on why we think shareholders might be hesitant about approving a raise at the moment.

View our latest analysis for Mount Gibson Iron

Comparing Mount Gibson Iron Limited's CEO Compensation With The Industry

Our data indicates that Mount Gibson Iron Limited has a market capitalization of AU$644m, and total annual CEO compensation was reported as AU$1.3m for the year to June 2023. That's a notable increase of 23% on last year. Notably, the salary which is AU$722.5k, represents a considerable chunk of the total compensation being paid.

On comparing similar companies from the Australian Metals and Mining industry with market caps ranging from AU$311m to AU$1.2b, we found that the median CEO total compensation was AU$1.2m. So it looks like Mount Gibson Iron compensates Peter Kerr in line with the median for the industry. What's more, Peter Kerr holds AU$2.5m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	AU$723k	AU$652k	56%
Other	AU$570k	AU$396k	44%
Total Compensation	AU$1.3m	AU$1.0m	100%

Talking in terms of the industry, salary represented approximately 61% of total compensation out of all the companies we analyzed, while other remuneration made up 39% of the pie. There isn't a significant difference between Mount Gibson Iron and the broader market, in terms of salary allocation in the overall compensation package. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Mount Gibson Iron Limited's Growth Numbers

Over the last three years, Mount Gibson Iron Limited has shrunk its earnings per share by 61% per year. Its revenue is up 220% over the last year.

Investors would be a bit wary of companies that have lower EPS But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Mount Gibson Iron Limited Been A Good Investment?

Given the total shareholder loss of 22% over three years, many shareholders in Mount Gibson Iron Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The company's earnings haven't grown and possibly because of that, the stock has performed poorly, resulting in a loss for the company's shareholders. Shareholders will get the chance at the upcoming AGM to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

Whatever your view on compensation, you might want to check if insiders are buying or selling Mount Gibson Iron shares (free trial).

Important note: Mount Gibson Iron 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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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.