What Can We Make Of Silver Lake Resources' (ASX:SLR) CEO Compensation?

Luke Tonkin has been the CEO of Silver Lake Resources Limited (ASX:SLR) since 2014, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Silver Lake Resources.

Check out our latest analysis for Silver Lake Resources

Comparing Silver Lake Resources Limited's CEO Compensation With the industry

Our data indicates that Silver Lake Resources Limited has a market capitalization of AU$1.5b, and total annual CEO compensation was reported as AU$1.7m for the year to June 2020. Notably, that's an increase of 18% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$753k.

In comparison with other companies in the industry with market capitalizations ranging from AU$521m to AU$2.1b, the reported median CEO total compensation was AU$1.1m. This suggests that Luke Tonkin is paid more than the median for the industry. Moreover, Luke Tonkin also holds AU$898k worth of Silver Lake Resources stock directly under their own name.

Speaking on an industry level, nearly 69% of total compensation represents salary, while the remainder of 31% is other remuneration. Silver Lake Resources pays a modest slice of remuneration through salary, as compared 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.

A Look at Silver Lake Resources Limited's Growth Numbers

Silver Lake Resources Limited has seen its earnings per share (EPS) increase by 326% a year over the past three years. It achieved revenue growth of 86% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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?

Most shareholders would probably be pleased with Silver Lake Resources Limited for providing a total return of 330% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

As previously discussed, Luke is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, Silver Lake Resources has produced strong EPS growth and shareholder returns over the last three years. As a result of the excellent all-round performance of the company, we believe CEO compensation is fair. Given the strong history of shareholder returns, the shareholders are probably very happy with Luke's performance.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 3 warning signs for Silver Lake Resources (of which 2 are significant!) that you should know about in order to have a holistic understanding of the stock.

Important note: Silver Lake 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. 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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