Does Pacific Nickel Mines' (ASX:PNM) CEO Salary Compare Well With The Performance Of The Company?

This article will reflect on the compensation paid to Geoff Hiller who has served as CEO of Pacific Nickel Mines Limited (ASX:PNM) since 2011. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Pacific Nickel Mines.

View our latest analysis for Pacific Nickel Mines

How Does Total Compensation For Geoff Hiller Compare With Other Companies In The Industry?

At the time of writing, our data shows that Pacific Nickel Mines Limited has a market capitalization of AU$8.4m, and reported total annual CEO compensation of AU$200k for the year to June 2020. That's a fairly small increase of 6.0% over the previous year. We note that the salary portion, which stands at AU$170.9k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under AU$259m, the reported median total CEO compensation was AU$307k. This suggests that Geoff Hiller is paid below the industry median. Moreover, Geoff Hiller also holds AU$245k worth of Pacific Nickel Mines stock directly under their own name.

Talking in terms of the industry, salary represented approximately 69% of total compensation out of all the companies we analyzed, while other remuneration made up 31% of the pie. Pacific Nickel Mines 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.

A Look at Pacific Nickel Mines Limited's Growth Numbers

Pacific Nickel Mines Limited has reduced its earnings per share by 27% a year over the last three years. In the last year, its revenue is down 56%.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Pacific Nickel Mines Limited Been A Good Investment?

Since shareholders would have lost about 91% over three years, some Pacific Nickel Mines Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we touched on above, Pacific Nickel Mines Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. EPS growth has failed to impress us, and the same can be said about shareholder returns. Although we wouldn’t say CEO compensation is high, it’s tough to foresee shareholders warming up to thoughts of a bump anytime soon.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 4 warning signs (and 3 which are concerning) in Pacific Nickel Mines we think you should know about.

Important note: Pacific Nickel Mines 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. 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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