Our Take On Strike Resources' (ASX:SRK) CEO Salary

This article will reflect on the compensation paid to William Johnson who has served as CEO of Strike Resources Limited (ASX:SRK) since 2013. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Strike Resources.

View our latest analysis for Strike Resources

How Does Total Compensation For William Johnson Compare With Other Companies In The Industry?

At the time of writing, our data shows that Strike Resources Limited has a market capitalization of AU$61m, and reported total annual CEO compensation of AU$228k for the year to June 2020. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is AU$208.0k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under AU$260m, the reported median total CEO compensation was AU$304k. So it looks like Strike Resources compensates William Johnson in line with the median for the industry. What's more, William Johnson holds AU$93k worth of shares in the company in their own name.

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. Strike Resources pays out 91% 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 Strike Resources Limited's Growth Numbers

Over the last three years, Strike Resources Limited has shrunk its earnings per share by 22% per year. Its revenue is down 68% 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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Strike Resources Limited Been A Good Investment?

Boasting a total shareholder return of 284% over three years, Strike Resources Limited has done well by shareholders. 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.

In Summary...

As we noted earlier, Strike Resources pays its CEO in line with similar-sized companies belonging to the same industry. This doesn't look good when you see that EPS growth over the last three years has been negative. On the flip side, shareholder returns have been strong over the same time, which is certainly a positive sign. We're not saying CEO compensation is too generous, but shareholders will probably want to see an increase in EPS before agreeing the business should pay any more.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 5 warning signs (and 2 which make us uncomfortable) in Strike Resources we think you should know about.

Important note: Strike 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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