We Think Some Shareholders May Hesitate To Increase Petra Diamonds Limited's (LON:PDL) CEO Compensation

Key Insights

• Petra Diamonds' Annual General Meeting to take place on 14th of November
• Total pay for CEO Richard Duffy includes US$580.1k salary
• The overall pay is 446% above the industry average
• Petra Diamonds' three-year loss to shareholders was 33% while its EPS grew by 101% over the past three years

In the past three years, the share price of Petra Diamonds Limited (LON:PDL) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 14th of November. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Petra Diamonds

How Does Total Compensation For Richard Duffy Compare With Other Companies In The Industry?

According to our data, Petra Diamonds Limited has a market capitalization of UK£95m, and paid its CEO total annual compensation worth US$1.3m over the year to June 2023. That's a modest increase of 4.4% on the prior year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$580k.

In comparison with other companies in the British Metals and Mining industry with market capitalizations under UK£163m, the reported median total CEO compensation was US$242k. Accordingly, our analysis reveals that Petra Diamonds Limited pays Richard Duffy north of the industry median. Moreover, Richard Duffy also holds UK£133k worth of Petra Diamonds stock directly under their own name.

Component	2023	2022	Proportion (2023)
Salary	US$580k	US$530k	44%
Other	US$740k	US$734k	56%
Total Compensation	US$1.3m	US$1.3m	100%

On an industry level, roughly 64% of total compensation represents salary and 36% is other remuneration. It's interesting to note that Petra Diamonds allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Petra Diamonds Limited's Growth

Over the past three years, Petra Diamonds Limited has seen its earnings per share (EPS) grow by 101% per year. It saw its revenue drop 42% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. 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 Petra Diamonds Limited Been A Good Investment?

The return of -33% over three years would not have pleased Petra Diamonds Limited shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At the upcoming AGM, shareholders will get the opportunity to discuss any issues 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. That's why we did some digging and identified 1 warning sign for Petra Diamonds that you should be aware of before investing.

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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.