How Should Investors React To Venture Minerals' (ASX:VMS) CEO Pay?

This article will reflect on the compensation paid to Andrew Radonjic who has served as CEO of Venture Minerals Limited (ASX:VMS) since 2017. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

Check out our latest analysis for Venture Minerals

Comparing Venture Minerals Limited's CEO Compensation With the industry

At the time of writing, our data shows that Venture Minerals Limited has a market capitalization of AU$68m, and reported total annual CEO compensation of AU$270k for the year to June 2020. We note that's a small decrease of 6.0% on last year. In particular, the salary of AU$214.8k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under AU$260m, the reported median total CEO compensation was AU$306k. From this we gather that Andrew Radonjic is paid around the median for CEOs in the industry. What's more, Andrew Radonjic holds AU$730k worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 69% of total compensation out of all the companies we analyzed, while other remuneration made up 31% of the pie. According to our research, Venture Minerals has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Venture Minerals Limited's Growth Numbers

Over the past three years, Venture Minerals Limited has seen its earnings per share (EPS) grow by 12% per year. In the last year, its revenue is up 8.4%.

Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Venture Minerals Limited Been A Good Investment?

Most shareholders would probably be pleased with Venture Minerals Limited for providing a total return of 51% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

As we touched on above, Venture Minerals Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Few would be critical of the leadership, since returns have been juicy and EPS are moving in the right direction. Although the pay is close to the industry median, overall performance is excellent, so we don't think the CEO is paid too generously. Also, such solid returns might lead to shareholders warming to the idea of a bump in pay.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 5 warning signs for Venture Minerals you should be aware of, and 2 of them are concerning.

Switching gears from Venture Minerals, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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