How Should Investors React To Silver Mines' (ASX:SVL) CEO Pay?

By
Simply Wall St
Published
January 19, 2021

Anthony McClure has been the CEO of Silver Mines Limited (ASX:SVL) since 2016, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Silver Mines

Comparing Silver Mines Limited's CEO Compensation With the industry

According to our data, Silver Mines Limited has a market capitalization of AU$229m, and paid its CEO total annual compensation worth AU$338k over the year to June 2020. That's mostly flat as compared to the prior year's compensation. In particular, the salary of AU$308.2k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations ranging from AU$130m to AU$521m, the reported median CEO total compensation was AU$513k. This suggests that Anthony McClure is paid below the industry median. Moreover, Anthony McClure also holds AU$9.2m worth of Silver Mines stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary AU$308k AU$317k 91%
Other AU$29k AU$30k 9%
Total CompensationAU$338k AU$347k100%

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. It's interesting to note that Silver Mines pays out a greater portion of remuneration through salary, compared to the industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

ASX:SVL CEO Compensation January 20th 2021

Silver Mines Limited's Growth

Silver Mines Limited has seen its earnings per share (EPS) increase by 21% a year over the past three years. Its revenue is down 7.5% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Silver Mines Limited Been A Good Investment?

Most shareholders would probably be pleased with Silver Mines Limited for providing a total return of 162% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

As previously discussed, Anthony is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. Considering robust EPS growth, we believe Anthony to be modestly paid. And given most shareholders are probably very happy with recent shareholder returns, they might even think Anthony deserves a raise!

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 2 warning signs for Silver Mines (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

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. 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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