We Think Shareholders May Want To Consider A Review Of Silver Lake Resources Limited's (ASX:SLR) CEO Compensation Package

Key Insights

• Silver Lake Resources' Annual General Meeting to take place on 24th of November
• Total pay for CEO Luke Tonkin includes AU$897.6k salary
• The overall pay is 42% above the industry average
• Silver Lake Resources' EPS declined by 53% over the past three years while total shareholder loss over the past three years was 44%

The results at Silver Lake Resources Limited (ASX:SLR) have been quite disappointing recently and CEO Luke Tonkin bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 24th of November. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for Silver Lake Resources

How Does Total Compensation For Luke Tonkin Compare With Other Companies In The Industry?

Our data indicates that Silver Lake Resources Limited has a market capitalization of AU$977m, and total annual CEO compensation was reported as AU$2.1m for the year to June 2023. That's just a smallish increase of 3.9% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$898k.

On examining similar-sized companies in the Australian Metals and Mining industry with market capitalizations between AU$615m and AU$2.5b, we discovered that the median CEO total compensation of that group was AU$1.5m. Accordingly, our analysis reveals that Silver Lake Resources Limited pays Luke Tonkin north of the industry median. Furthermore, Luke Tonkin directly owns AU$799k worth of shares in the company.

Component	2023	2022	Proportion (2023)
Salary	AU$898k	AU$846k	42%
Other	AU$1.2m	AU$1.2m	58%
Total Compensation	AU$2.1m	AU$2.1m	100%

On an industry level, around 61% of total compensation represents salary and 39% is other remuneration. It's interesting to note that Silver Lake Resources allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Silver Lake Resources Limited's Growth

Silver Lake Resources Limited has reduced its earnings per share by 53% a year over the last three years. Its revenue is up 13% over the last year.

Overall this is not a very positive result for shareholders. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. 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 Silver Lake Resources Limited Been A Good Investment?

With a total shareholder return of -44% over three years, Silver Lake Resources Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. 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.

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. We've identified 1 warning sign for Silver Lake Resources that investors should be aware of in a dynamic business environment.

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. 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.