This article will reflect on the compensation paid to Luke Graham who has served as CEO of Strandline Resources Limited (ASX:STA) since 2016. This analysis will also assess whether Strandline Resources pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Strandline Resources Limited's CEO Compensation With the industry
According to our data, Strandline Resources Limited has a market capitalization of AU$105m, and paid its CEO total annual compensation worth AU$906k over the year to June 2020. That's mostly flat as compared to the prior year's compensation. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$380k.
In comparison with other companies in the industry with market capitalizations under AU$257m, the reported median total CEO compensation was AU$308k. Accordingly, our analysis reveals that Strandline Resources Limited pays Luke Graham north of the industry median. Moreover, Luke Graham also holds AU$2.0m worth of Strandline Resources stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Speaking on an industry level, nearly 68% of total compensation represents salary, while the remainder of 32% is other remuneration. Strandline Resources pays a modest slice of remuneration through salary, as compared to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Strandline Resources Limited's Growth
Over the last three years, Strandline Resources Limited has shrunk its earnings per share by 8.5% per year. It saw its revenue drop 52% over the last year.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Strandline Resources Limited Been A Good Investment?
Boasting a total shareholder return of 48% over three years, Strandline Resources Limited has done well by shareholders. 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.
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. The company isn't growing EPS, but shareholder returns have been impressive over the last three years. So while we don't think, Luke is paid too much, shareholders may want to see some positive EPS growth before pay rises are given out.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 4 warning signs for Strandline Resources (of which 2 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.
Important note: Strandline 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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