Why We Think Traka Resources Limited's (ASX:TKL) CEO Compensation Is Not Excessive At All

By
Simply Wall St
Published
November 23, 2021
ASX:TKL
Source: Shutterstock

Performance at Traka Resources Limited (ASX:TKL) has been rather uninspiring recently and shareholders may be wondering how CEO Patrick Verbeek plans to fix this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 30 November 2021. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. We think CEO compensation looks appropriate given the data we have put together.

View our latest analysis for Traka Resources

Comparing Traka Resources Limited's CEO Compensation With the industry

At the time of writing, our data shows that Traka Resources Limited has a market capitalization of AU$8.1m, and reported total annual CEO compensation of AU$228k for the year to June 2021. We note that's a decrease of 13% compared to last year. Notably, the salary of AU$228k is the entirety of the CEO compensation.

For comparison, other companies in the industry with market capitalizations below AU$276m, reported a median total CEO compensation of AU$352k. That is to say, Patrick Verbeek is paid under the industry median. Moreover, Patrick Verbeek also holds AU$323k worth of Traka Resources stock directly under their own name.

Component20212020Proportion (2021)
Salary AU$228k AU$253k 100%
Other - AU$8.5k -
Total CompensationAU$228k AU$262k100%

On an industry level, roughly 59% of total compensation represents salary and 41% is other remuneration. On a company level, Traka Resources prefers to reward its CEO through a salary, opting not to pay Patrick Verbeek through non-salary benefits. 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:TKL CEO Compensation November 23rd 2021

A Look at Traka Resources Limited's Growth Numbers

Traka Resources Limited's earnings per share (EPS) grew 19% per year over the last three years. Revenue was pretty flat on last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Traka Resources Limited Been A Good Investment?

The return of -43% over three years would not have pleased Traka Resources Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Traka Resources pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. The loss to shareholders over the past three years is certainly concerning. This diverges with the robust growth in EPS, suggesting that there is a large discrepancy between share price and fundamentals. There needs to be more focus by management and the board to examine why the share price has diverged from fundamentals. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.

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. That's why we did our research, and identified 5 warning signs for Traka Resources (of which 4 are a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

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.

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.

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

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Simply Wall St

Simply Wall St is focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of data scientists and multiple equity analysts with over two decades worth of financial markets experience between them.