Is Sunstone Metals Limited’s (ASX:STM) CEO Being Overpaid?

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In 2014 Malcolm Norris was appointed CEO of Sunstone Metals Limited (ASX:STM). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Sunstone Metals

How Does Malcolm Norris’s Compensation Compare With Similar Sized Companies?

Our data indicates that Sunstone Metals Limited is worth AU$49m, and total annual CEO compensation is AU$375k. (This is based on the year to June 2018). We think total compensation is more important but we note that the CEO salary is lower, at AU$322k. We took a group of companies with market capitalizations below AU$286m, and calculated the median CEO total compensation to be AU$354k.

That means Malcolm Norris receives fairly typical remuneration for the CEO of a company that size. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance.

You can see a visual representation of the CEO compensation at Sunstone Metals, below.

ASX:STM CEO Compensation, May 14th 2019
ASX:STM CEO Compensation, May 14th 2019

Is Sunstone Metals Limited Growing?

Over the last three years Sunstone Metals Limited has grown its earnings per share (EPS) by an average of 63% per year (using a line of best fit). Its revenue is up 320% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. We don’t have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Sunstone Metals Limited Been A Good Investment?

I think that the total shareholder return of 164%, over three years, would leave most Sunstone Metals Limited shareholders smiling. 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.

In Summary…

Malcolm Norris is paid around the same as most CEOs of similar size companies.

Shareholders would surely be happy to see that shareholder returns have been great, and the earnings per share are up. So one could argue the CEO compensation is quite modest, if you consider company performance! Whatever your view on compensation, you might want to check if insiders are buying or selling Sunstone Metals shares (free trial).

Important note: Sunstone Metals may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.