OZ Minerals Limited's (ASX:OZL) CEO Compensation Looks Acceptable To Us And Here's Why

Performance at OZ Minerals Limited (ASX:OZL) has been reasonably good and CEO Andrew Cole has done a decent job of steering the company in the right direction. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 01 April 2021. Here is our take on why we think the CEO compensation looks appropriate.

View our latest analysis for OZ Minerals

Comparing OZ Minerals Limited's CEO Compensation With the industry

At the time of writing, our data shows that OZ Minerals Limited has a market capitalization of AU$7.4b, and reported total annual CEO compensation of AU$2.9m for the year to December 2020. Notably, that's an increase of 18% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$879k.

In comparison with other companies in the industry with market capitalizations ranging from AU$5.2b to AU$16b, the reported median CEO total compensation was AU$3.6m. From this we gather that Andrew Cole is paid around the median for CEOs in the industry. What's more, Andrew Cole holds AU$11m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	AU$879k	AU$829k	30%
Other	AU$2.0m	AU$1.6m	70%
Total Compensation	AU$2.9m	AU$2.4m	100%

On an industry level, roughly 69% of total compensation represents salary and 31% is other remuneration. OZ Minerals sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at OZ Minerals Limited's Growth Numbers

Over the last three years, OZ Minerals Limited has shrunk its earnings per share by 5.5% per year. In the last year, its revenue is up 21%.

Investors would be a bit wary of companies that have lower EPS But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has OZ Minerals Limited Been A Good Investment?

Most shareholders would probably be pleased with OZ Minerals Limited for providing a total return of 165% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

The overall company performance has been commendable, however there are still areas for improvement. Despite robust revenue growth, until EPS growth improves, shareholders may be hesitant to increase CEO pay by too much.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for OZ Minerals that investors should be aware of in a dynamic business environment.

Switching gears from OZ Minerals, 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.

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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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