We Think Shareholders Will Probably Be Generous With West African Resources Limited's (ASX:WAF) CEO Compensation

It would be hard to discount the role that CEO Richard Hyde has played in delivering the impressive results at West African Resources Limited (ASX:WAF) recently. Shareholders will have this at the front of their minds in the upcoming AGM on 14 May 2021. This would also be a chance for them to hear the board review the financial results, discuss future company strategy and vote on any resolutions such as executive remuneration. Here is our take on why we think CEO compensation is not extravagant.

See our latest analysis for West African Resources

Comparing West African Resources Limited's CEO Compensation With the industry

Our data indicates that West African Resources Limited has a market capitalization of AU$857m, and total annual CEO compensation was reported as AU$1.2m for the year to December 2020. Notably, that's an increase of 80% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$490k.

On comparing similar companies from the same industry with market caps ranging from AU$515m to AU$2.1b, we found that the median CEO total compensation was AU$1.2m. This suggests that West African Resources remunerates its CEO largely in line with the industry average. What's more, Richard Hyde holds AU$19m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	AU$490k	AU$400k	40%
Other	AU$738k	AU$281k	60%
Total Compensation	AU$1.2m	AU$681k	100%

Speaking on an industry level, nearly 69% of total compensation represents salary, while the remainder of 31% is other remuneration. West African Resources pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at West African Resources Limited's Growth Numbers

Over the past three years, West African Resources Limited has seen its earnings per share (EPS) grow by 108% per year. Its revenue is up 19,871% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has West African Resources Limited Been A Good Investment?

We think that the total shareholder return of 183%, over three years, would leave most West African Resources Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Some shareholders will probably be more lenient on CEO compensation in the upcoming AGM given the pleasing performance of the company recently. However, despite the strong growth in earnings and share price growth, the focus for shareholders would be how the company plans to steer the company towards sustainable profitability in the near future.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for West African Resources (1 shouldn't be ignored!) that you should be aware of before investing here.

Switching gears from West African Resources, 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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