Is Syrah Resources Limited (ASX:SYR) Overpaying Its CEO?

Shaun Verner has been the CEO of Syrah Resources Limited (ASX:SYR) since 2017. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Syrah Resources

How Does Shaun Verner’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Syrah Resources Limited has a market cap of AU$287m, and is paying total annual CEO compensation of US$934k. (This number is for the twelve months until December 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$352k. When we examined a selection of companies with market caps ranging from US$100m to US$400m, we found the median CEO total compensation was US$483k.

Thus we can conclude that Shaun Verner receives more in total compensation than the median of a group of companies in the same market, and of similar size to Syrah Resources Limited. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see a visual representation of the CEO compensation at Syrah Resources, below.

ASX:SYR CEO Compensation, August 24th 2019
ASX:SYR CEO Compensation, August 24th 2019

Is Syrah Resources Limited Growing?

On average over the last three years, Syrah Resources Limited has shrunk earnings per share by 25% each year (measured with a line of best fit). In the last year, its revenue is down -7.9%.

Unfortunately, earnings per share have trended lower over the last three years. And the impression is worse when you consider revenue is down year-on-year. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration.

Has Syrah Resources Limited Been A Good Investment?

Since shareholders would have lost about 83% over three years, some Syrah Resources Limited shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

We compared total CEO remuneration at Syrah Resources Limited with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

We think many shareholders would be underwhelmed with the business growth over the last three years.

Over the same period, investors would have come away with nothing in the way of share price gains. This analysis suggests to us that the CEO is paid too generously! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Syrah Resources.

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

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.