Does Nex Metals Explorations' (ASX:NME) CEO Salary Compare Well With The Performance Of The Company?

This article will reflect on the compensation paid to Ken Allen who has served as CEO of Nex Metals Explorations Limited (ASX:NME) since 2007. This analysis will also assess whether Nex Metals Explorations pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Nex Metals Explorations

Comparing Nex Metals Explorations Limited's CEO Compensation With the industry

At the time of writing, our data shows that Nex Metals Explorations Limited has a market capitalization of AU$15m, and reported total annual CEO compensation of AU$134k for the year to June 2020. This means that the compensation hasn't changed much from last year. Notably, the salary which is AU$122.0k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below AU$260m, reported a median total CEO compensation of AU$311k. In other words, Nex Metals Explorations pays its CEO lower than the industry median. Furthermore, Ken Allen directly owns AU$392k 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. Nex Metals Explorations is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Nex Metals Explorations Limited's Growth

Over the last three years, Nex Metals Explorations Limited has shrunk its earnings per share by 73% per year. In the last year, its revenue is down 73%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-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 Nex Metals Explorations Limited Been A Good Investment?

We think that the total shareholder return of 450%, over three years, would leave most Nex Metals Explorations Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

As we noted earlier, Nex Metals Explorations pays its CEO lower than the norm for similar-sized companies belonging to the same industry. And although the company is suffering from declining EPS growth over the past three years, shareholder returns remain strong. So, while it would be nice to have better EPS growth, our analysis suggests CEO compensation is quite modest.

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 4 warning signs for Nex Metals Explorations you should be aware of, and 2 of them can't be ignored.

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.

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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.
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