Shareholders Will Most Likely Find Antofagasta plc's (LON:ANTO) CEO Compensation Acceptable

Despite strong share price growth of 102% for Antofagasta plc (LON:ANTO) over the last few years, earnings growth has been disappointing, which suggests something is amiss. The upcoming AGM on 12 May 2021 may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

View our latest analysis for Antofagasta

How Does Total Compensation For Ivan Arriagada Herrera Compare With Other Companies In The Industry?

At the time of writing, our data shows that Antofagasta plc has a market capitalization of UK£19b, and reported total annual CEO compensation of US$3.9m for the year to December 2020. Notably, that's an increase of 60% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$589k.

For comparison, other companies in the industry with market capitalizations above UK£5.8b, reported a median total CEO compensation of US$3.3m. From this we gather that Ivan Arriagada Herrera is paid around the median for CEOs in the industry.

Component	2020	2019	Proportion (2020)
Salary	US$589k	US$640k	15%
Other	US$3.4m	US$1.8m	85%
Total Compensation	US$3.9m	US$2.5m	100%

On an industry level, roughly 65% of total compensation represents salary and 35% is other remuneration. Antofagasta sets aside a smaller share of compensation for salary, in comparison to the overall 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 Antofagasta plc's Growth Numbers

Over the last three years, Antofagasta plc has shrunk its earnings per share by 13% per year. In the last year, its revenue is up 3.4%.

The decline in EPS is a bit concerning. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Antofagasta plc Been A Good Investment?

Most shareholders would probably be pleased with Antofagasta plc for providing a total return of 102% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 1 warning sign for Antofagasta that you should be aware of before investing.

Switching gears from Antofagasta, 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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