Shareholders May Not Be So Generous With Traka Resources Limited's (ASX:TKL) CEO Compensation And Here's Why

Key Insights

• Traka Resources will host its Annual General Meeting on 24th of November
• CEO Patrick Verbeek's total compensation includes salary of AU$270.0k
• Total compensation is similar to the industry average
• Traka Resources' EPS grew by 2.0% over the past three years while total shareholder loss over the past three years was 81%

The underwhelming share price performance of Traka Resources Limited (ASX:TKL) in the past three years would have disappointed many shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 24th of November. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

See our latest analysis for Traka Resources

Comparing Traka Resources Limited's CEO Compensation With The Industry

According to our data, Traka Resources Limited has a market capitalization of AU$3.5m, and paid its CEO total annual compensation worth AU$278k over the year to June 2023. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is AU$270.0k, represents most of the total compensation being paid.

On comparing similar-sized companies in the Australian Metals and Mining industry with market capitalizations below AU$308m, we found that the median total CEO compensation was AU$387k. So it looks like Traka Resources compensates Patrick Verbeek in line with the median for the industry. Furthermore, Patrick Verbeek directly owns AU$97k worth of shares in the company.

Component	2023	2022	Proportion (2023)
Salary	AU$270k	AU$260k	97%
Other	AU$7.8k	AU$19k	3%
Total Compensation	AU$278k	AU$279k	100%

Speaking on an industry level, nearly 61% of total compensation represents salary, while the remainder of 39% is other remuneration. Investors will find it interesting that Traka Resources pays the bulk of its rewards through a traditional salary, instead of non-salary benefits. 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.

Traka Resources Limited's Growth

Traka Resources Limited's earnings per share (EPS) grew 2.0% per year over the last three years. It achieved revenue growth of 1,557% over the last year.

It's hard to interpret the strong revenue growth as anything other than a positive. With that in mind, the modestly improving EPS seems positive. We wouldn't say this is necessarily top notch growth, but it is certainly promising. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Traka Resources Limited Been A Good Investment?

The return of -81% over three years would not have pleased Traka Resources Limited shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Traka Resources pays its CEO a majority of compensation through a salary. Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 7 warning signs for Traka Resources you should be aware of, and 6 of them are a bit concerning.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.