Stock Analysis

Here's Why It's Unlikely That Hochschild Mining plc's (LON:HOC) CEO Will See A Pay Rise This Year

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The results at Hochschild Mining plc (LON:HOC) have been quite disappointing recently and CEO Ignacio Bustamante bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 27 May 2021. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

See our latest analysis for Hochschild Mining

Comparing Hochschild Mining plc's CEO Compensation With the industry

According to our data, Hochschild Mining plc has a market capitalization of UK£987m, and paid its CEO total annual compensation worth US$1.9m over the year to December 2020. We note that's a decrease of 47% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$700k.

For comparison, other companies in the same industry with market capitalizations ranging between UK£706m and UK£2.3b had a median total CEO compensation of US$1.1m. Accordingly, our analysis reveals that Hochschild Mining plc pays Ignacio Bustamante north of the industry median. Moreover, Ignacio Bustamante also holds UK£2.3m worth of Hochschild Mining stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary US$700k US$700k 36%
Other US$1.2m US$3.0m 64%
Total CompensationUS$1.9m US$3.7m100%

Speaking on an industry level, nearly 63% of total compensation represents salary, while the remainder of 37% is other remuneration. Hochschild Mining 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.

LSE:HOC CEO Compensation May 21st 2021

A Look at Hochschild Mining plc's Growth Numbers

Over the last three years, Hochschild Mining plc has shrunk its earnings per share by 29% per year. It saw its revenue drop 18% over the last year.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Hochschild Mining plc Been A Good Investment?

With a three year total loss of 7.2% for the shareholders, Hochschild Mining plc would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 4 warning signs for Hochschild Mining that investors should look into moving forward.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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