Here's Why We Think Reedy Lagoon Corporation Limited's (ASX:RLC) CEO Compensation Looks Fair

Key Insights

• Reedy Lagoon will host its Annual General Meeting on 21st of November
• CEO Geof Fethers' total compensation includes salary of AU$45.4k
• The overall pay is 66% below the industry average
• Reedy Lagoon's EPS declined by 21% over the past three years while total shareholder loss over the past three years was 55%

The performance at Reedy Lagoon Corporation Limited (ASX:RLC) has been rather lacklustre of late and shareholders may be wondering what CEO Geof Fethers is planning to do about this. At the next AGM coming up on 21st of November, they can influence managerial decision making through voting on resolutions, including executive remuneration. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We think CEO compensation looks appropriate given the data we have put together.

View our latest analysis for Reedy Lagoon

How Does Total Compensation For Geof Fethers Compare With Other Companies In The Industry?

At the time of writing, our data shows that Reedy Lagoon Corporation Limited has a market capitalization of AU$3.1m, and reported total annual CEO compensation of AU$131k for the year to June 2023. That's a notable decrease of 63% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$45k.

For comparison, other companies in the Australian Metals and Mining industry with market capitalizations below AU$307m, reported a median total CEO compensation of AU$380k. That is to say, Geof Fethers is paid under the industry median. What's more, Geof Fethers holds AU$384k 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$45k	AU$78k	35%
Other	AU$85k	AU$274k	65%
Total Compensation	AU$131k	AU$352k	100%

Speaking on an industry level, nearly 61% of total compensation represents salary, while the remainder of 39% is other remuneration. It's interesting to note that Reedy Lagoon allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Reedy Lagoon Corporation Limited's Growth

Reedy Lagoon Corporation Limited has reduced its earnings per share by 21% a year over the last three years. Its revenue is up 1,581% over the last year.

The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Reedy Lagoon Corporation Limited Been A Good Investment?

The return of -55% over three years would not have pleased Reedy Lagoon Corporation Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The fact that shareholders have earned a negative share price return is certainly disconcerting. The fact that earnings growth has gone backwards could be a factor for the downward trend in the share price. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 6 warning signs for Reedy Lagoon you should be aware of, and 5 of them don't sit too well with us.

Important note: Reedy Lagoon 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.