We Discuss Why Fresnillo plc's (LON:FRES) CEO Will Find It Hard To Get A Pay Rise From Shareholders This Year

Performance at Fresnillo plc (LON:FRES) has not been particularly rosy recently and shareholders will likely be holding CEO Octavio M. Alvidrez and the board accountable for this. The next AGM coming up on 24 June 2021 will be a chance for shareholders to have their concerns addressed by the board, challenge management on company strategy and vote on resolutions such as executive remuneration, which may help change the company's future prospects. The data we gathered below shows that CEO compensation looks acceptable for now.

See our latest analysis for Fresnillo

How Does Total Compensation For Octavio M. Alvidrez Compare With Other Companies In The Industry?

Our data indicates that Fresnillo plc has a market capitalization of UK£5.9b, and total annual CEO compensation was reported as US$939k for the year to December 2020. We note that's a decrease of 19% compared to last year. In particular, the salary of US$736.0k, 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 ranging from UK£2.9b to UK£8.6b, the reported median CEO total compensation was US$1.8m. Accordingly, Fresnillo pays its CEO under the industry median.

Component	2020	2019	Proportion (2020)
Salary	US$736k	US$871k	78%
Other	US$203k	US$293k	22%
Total Compensation	US$939k	US$1.2m	100%

Speaking on an industry level, nearly 61% of total compensation represents salary, while the remainder of 39% is other remuneration. It's interesting to note that Fresnillo pays out a greater portion of remuneration through salary, compared to the industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Fresnillo plc's Growth

Over the last three years, Fresnillo plc has shrunk its earnings per share by 13% per year. Its revenue is up 15% over the last year.

Few shareholders would be pleased to read that EPS have declined. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Fresnillo plc Been A Good Investment?

With a three year total loss of 25% for the shareholders, Fresnillo plc would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Fresnillo that investors should look into moving forward.

Important note: Fresnillo 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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