Does Golden Resources Development International's (HKG:677) CEO Salary Compare Well With The Performance Of The Company?

Anthony Lam became the CEO of Golden Resources Development International Limited (HKG:677) in 2013, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Golden Resources Development International pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Golden Resources Development International

Comparing Golden Resources Development International Limited's CEO Compensation With the industry

Our data indicates that Golden Resources Development International Limited has a market capitalization of HK$1.0b, and total annual CEO compensation was reported as HK$3.6m for the year to March 2020. We note that's a small decrease of 3.2% on last year. In particular, the salary of HK$3.14m, 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 under HK$1.6b, the reported median total CEO compensation was HK$1.4m. Accordingly, our analysis reveals that Golden Resources Development International Limited pays Anthony Lam north of the industry median.

Speaking on an industry level, nearly 89% of total compensation represents salary, while the remainder of 11% is other remuneration. There isn't a significant difference between Golden Resources Development International and the broader market, in terms of salary allocation in the overall compensation package. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Golden Resources Development International Limited's Growth Numbers

Over the last three years, Golden Resources Development International Limited has shrunk its earnings per share by 97% per year. In the last year, its revenue is up 4.1%.

The decline in EPS is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Golden Resources Development International Limited Been A Good Investment?

Boasting a total shareholder return of 45% over three years, Golden Resources Development International Limited has done well by shareholders. 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.

To Conclude...

As previously discussed, Anthony is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. The company isn't growing EPS, but shareholder returns have been impressive over the last three years. Considering positive investor returns, it would be bold of us to criticize CEO compensation, but shareholders might want to see healthier EPS growth before a raise is given out.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 2 warning signs for Golden Resources Development International (1 makes us a bit uncomfortable!) that you should be aware of before investing here.

Important note: Golden Resources Development International 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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