This article will reflect on the compensation paid to Mel Palancian who has served as CEO of Red River Resources Limited (ASX:RVR) since 2015. This analysis will also assess whether Red River Resources pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
See our latest analysis for Red River Resources
How Does Total Compensation For Mel Palancian Compare With Other Companies In The Industry?
According to our data, Red River Resources Limited has a market capitalization of AU$137m, and paid its CEO total annual compensation worth AU$443k over the year to June 2020. That's a modest increase of 7.7% on the prior year. We note that the salary portion, which stands at AU$268.8k constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations under AU$260m, the reported median total CEO compensation was AU$309k. Hence, we can conclude that Mel Palancian is remunerated higher than the industry median. Moreover, Mel Palancian also holds AU$568k worth of Red River Resources stock directly under their own name.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$269k | AU$251k | 61% |
| Other | AU$174k | AU$160k | 39% |
| Total Compensation | AU$443k | AU$411k | 100% |
On an industry level, around 69% of total compensation represents salary and 31% is other remuneration. It's interesting to note that Red River Resources allocates a smaller portion of compensation to salary in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Red River Resources Limited's Growth Numbers
Over the last three years, Red River Resources Limited has shrunk its earnings per share by 30% per year. In the last year, its revenue is down 34%.
Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Red River Resources Limited Been A Good Investment?
Given the total shareholder loss of 30% over three years, many shareholders in Red River Resources Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
In Summary...
As we noted earlier, Red River Resources pays its CEO higher than the norm for similar-sized companies belonging to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 2 warning signs for Red River Resources that investors should think about before committing capital to this stock.
Switching gears from Red River Resources, 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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About ASX:RVR
Red River Resources
Red River Resources Limited, together with its subsidiaries, explores for and develops mineral projects in Australia.
Adequate balance sheet and slightly overvalued.
