Why We Think Shareholders May Be Considering Bumping Up Rumble Resources Limited's (ASX:RTR) CEO Compensation

The impressive results at Rumble Resources Limited (ASX:RTR) recently will be great news for shareholders. At the upcoming AGM on 17 June 2021, they would be interested to hear about the company strategy going forward and get a chance to cast their votes on resolutions such as executive remuneration and other company matters. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

Check out our latest analysis for Rumble Resources

How Does Total Compensation For Shane Sikora Compare With Other Companies In The Industry?

Our data indicates that Rumble Resources Limited has a market capitalization of AU$261m, and total annual CEO compensation was reported as AU$256k for the year to June 2020. That's a notable increase of 17% on last year. Notably, the salary which is AU$200.0k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations ranging from AU$129m to AU$516m, the reported median CEO total compensation was AU$470k. In other words, Rumble Resources pays its CEO lower than the industry median. Moreover, Shane Sikora also holds AU$3.6m worth of Rumble Resources stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	AU$200k	AU$196k	78%
Other	AU$56k	AU$23k	22%
Total Compensation	AU$256k	AU$219k	100%

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. Rumble Resources pays out 78% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Rumble Resources Limited's Growth Numbers

Rumble Resources Limited has seen its earnings per share (EPS) increase by 64% a year over the past three years. In the last year, its revenue is up 2,550%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. 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 Rumble Resources Limited Been A Good Investment?

Most shareholders would probably be pleased with Rumble Resources Limited for providing a total return of 554% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Some shareholders will probably be more lenient on CEO compensation in the upcoming AGM given the pleasing performance of the company recently. In saying that, some shareholders may feel that the more important issues to be addressed may be how the management plans to steer the company towards sustainable profitability in the future.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 4 warning signs for Rumble Resources you should be aware of, and 2 of them make us uncomfortable.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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