Swick Mining Services Limited's (ASX:SWK) CEO Compensation Is Looking A Bit Stretched At The Moment

By
Simply Wall St
Published
October 29, 2021
ASX:SWK
Source: Shutterstock

Swick Mining Services Limited (ASX:SWK) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. The upcoming AGM on 05 November 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

Check out our latest analysis for Swick Mining Services

How Does Total Compensation For Kent Swick Compare With Other Companies In The Industry?

According to our data, Swick Mining Services Limited has a market capitalization of AU$94m, and paid its CEO total annual compensation worth AU$802k over the year to June 2021. That's a notable increase of 35% on last year. Notably, the salary which is AU$589.7k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under AU$267m, the reported median total CEO compensation was AU$358k. Hence, we can conclude that Kent Swick is remunerated higher than the industry median. Moreover, Kent Swick also holds AU$11m worth of Swick Mining Services stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20212020Proportion (2021)
Salary AU$590k AU$556k 74%
Other AU$212k AU$39k 26%
Total CompensationAU$802k AU$595k100%

On an industry level, around 60% of total compensation represents salary and 40% is other remuneration. Swick Mining Services is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
ASX:SWK CEO Compensation October 29th 2021

Swick Mining Services Limited's Growth

Over the last three years, Swick Mining Services Limited has shrunk its earnings per share by 25% per year. In the last year, its revenue is up 4.7%.

Few shareholders would be pleased to read that EPS have declined. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Swick Mining Services Limited Been A Good Investment?

Most shareholders would probably be pleased with Swick Mining Services Limited for providing a total return of 55% 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.

In Summary...

Despite the strong returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 3 warning signs for Swick Mining Services that investors should look into moving forward.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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