Shareholders May Find It Hard To Justify Increasing Todd River Resources Limited's (ASX:TRT) CEO Compensation For Now

The underwhelming share price performance of Todd River Resources Limited (ASX:TRT) in the past three years would have disappointed many shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 28 April 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

View our latest analysis for Todd River Resources

How Does Total Compensation For Will Dix Compare With Other Companies In The Industry?

According to our data, Todd River Resources Limited has a market capitalization of AU$39m, and paid its CEO total annual compensation worth AU$298k over the year to June 2020. That's a notable decrease of 32% on last year. We note that the salary portion, which stands at AU$270.0k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below AU$259m, reported a median total CEO compensation of AU$305k. This suggests that Todd River Resources remunerates its CEO largely in line with the industry average. Moreover, Will Dix also holds AU$139k worth of Todd River Resources stock directly under their own name.

Component	2020	2019	Proportion (2020)
Salary	AU$270k	AU$285k	91%
Other	AU$28k	AU$151k	9%
Total Compensation	AU$298k	AU$436k	100%

Speaking on an industry level, nearly 69% of total compensation represents salary, while the remainder of 31% is other remuneration. Todd River Resources pays out 91% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Todd River Resources Limited's Growth

Over the past three years, Todd River Resources Limited has seen its earnings per share (EPS) grow by 17% per year. It saw its revenue drop 96% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Todd River Resources Limited Been A Good Investment?

Given the total shareholder loss of 17% over three years, many shareholders in Todd River Resources Limited are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would be keen to know what's holding the stock back when earnings have grown. 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.

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 5 warning signs for Todd River Resources (3 are a bit unpleasant!) that you should be aware of before investing here.

Important note: Todd River Resources is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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