Shareholders Will Probably Not Have Any Issues With Kenmare Resources plc's (LON:KMR) CEO Compensation

Kenmare Resources plc (LON:KMR) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 13 May 2021. 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. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

View our latest analysis for Kenmare Resources

How Does Total Compensation For Michael Carvill Compare With Other Companies In The Industry?

Our data indicates that Kenmare Resources plc has a market capitalization of UK£494m, and total annual CEO compensation was reported as US$1.1m for the year to December 2020. We note that's a decrease of 26% compared to last year. In particular, the salary of US$619.0k, makes up a fairly large portion of the total compensation being paid to the CEO.

On comparing similar companies from the same industry with market caps ranging from UK£288m to UK£1.2b, we found that the median CEO total compensation was US$887k. This suggests that Kenmare Resources remunerates its CEO largely in line with the industry average. What's more, Michael Carvill holds UK£1.4m worth of shares in the company in their own name.

Component	2020	2019	Proportion (2020)
Salary	US$619k	US$616k	58%
Other	US$451k	US$828k	42%
Total Compensation	US$1.1m	US$1.4m	100%

Talking in terms of the industry, salary represented approximately 65% of total compensation out of all the companies we analyzed, while other remuneration made up 35% of the pie. It's interesting to note that Kenmare Resources allocates a smaller portion of compensation to salary in comparison to the broader 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.

Kenmare Resources plc's Growth

Kenmare Resources plc has reduced its earnings per share by 4.8% a year over the last three years. It saw its revenue drop 10% over the last year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Kenmare Resources plc Been A Good Investment?

We think that the total shareholder return of 92%, over three years, would leave most Kenmare Resources plc shareholders smiling. 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.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 2 warning signs for Kenmare Resources 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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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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