We Think Ramelius Resources Limited's (ASX:RMS) CEO Compensation Package Needs To Be Put Under A Microscope

Ramelius Resources Limited (ASX:RMS) has not performed well recently and CEO Mark Zeptner will probably need to up their game. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 24 November 2022. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Our analysis indicates that RMS is potentially overvalued!

Comparing Ramelius Resources Limited's CEO Compensation With The Industry

Our data indicates that Ramelius Resources Limited has a market capitalization of AU$724m, and total annual CEO compensation was reported as AU$1.5m for the year to June 2022. We note that's an increase of 9.5% above last year. We note that the salary of AU$742.5k makes up a sizeable portion of the total compensation received by the CEO.

On comparing similar companies from the same industry with market caps ranging from AU$296m to AU$1.2b, we found that the median CEO total compensation was AU$1.1m. This suggests that Mark Zeptner is paid more than the median for the industry. Moreover, Mark Zeptner also holds AU$3.8m worth of Ramelius Resources stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2022	2021	Proportion (2022)
Salary	AU$743k	AU$700k	50%
Other	AU$731k	AU$646k	50%
Total Compensation	AU$1.5m	AU$1.3m	100%

Speaking on an industry level, nearly 60% of total compensation represents salary, while the remainder of 40% is other remuneration. In Ramelius Resources' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Ramelius Resources Limited's Growth Numbers

Over the last three years, Ramelius Resources Limited has shrunk its earnings per share by 28% per year. Its revenue is down 4.8% over the previous year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Ramelius Resources Limited Been A Good Investment?

Given the total shareholder loss of 14% over three years, many shareholders in Ramelius Resources Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Ramelius Resources that you should be aware of before investing.

Important note: Ramelius Resources 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.