What has MXR's performance been like?
Earnings is a powerful indication of MXR's ability to invest shareholders' funds and generate returns. Therefore I will use earnings as a proxy of Malaxos's performance in the past year. Most recently, MXR delivered negative earnings of -AU$937.89K . However, this is an improvement on prior year’s loss of -AU$3.60M, which may signal a turnaround since MXR has been loss-making for the past five years, on average, with an EPS of -AU$0.0014. Given earnings are moving the right way, CEO pay should mirror Malaxos's value creation for shareholders. Over the same period Malaxos's total remuneration dropped by a non-trivial rate of -25.00%, to AU$206.25K. In addition to this, Malaxos's pay is also made up of 16.73% non-cash elements, which means that fluxes in MXR's share price can impact the real level of what the CEO actually collects at the end of the year.What's a reasonable CEO compensation?
While one size does not fit all, since compensation should be tailored to the specific company and market, we can fashion a high-level thresold to see if MXR is an outlier. This exercise can help direct shareholders to ask the right question about Malaxos’s incentive alignment. Typically, an Australian small-cap has a value of $140M, creates earnings of $10M, and remunerates its CEO at roughly $500,000 per annum. Normally I'd use market cap and profit as factors determining performance, however, MXR's negative earnings lower the usefulness of my formula. Analyzing the range of remuneration for small-cap executives, it seems like Malaxos is remunerated sensibly relative to peers. Overall, though MXR is unprofitable, it seems like the CEO’s pay is reflective of the appropriate level.
Next Steps:
CEO pay is one of those topics of high controversy. Nonetheless, it should be talked about with full transparency from the board to shareholders. Is Malaxos remunerated appropriately based on other factors we have not covered today? Is this justified? As a shareholder, you should be aware of how those that represent you (i.e. the board of directors) make decisions on CEO pay and whether their incentives are aligned with yours. If you have not done so already, I urge you to complete your research by taking a look at the following:
- Governance: To find out more about MXR's governance, look through our infographic report of the company's board and management.
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of MXR? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
Valuation is complex, but we're here to simplify it.
Discover if Maximus Resources might be undervalued or overvalued with our detailed analysis, featuring fair value estimates, potential risks, dividends, insider trades, and its financial condition.
Access Free AnalysisHave feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article 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.