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Is Alexco Resource Corp. (TSE:AXU) Overpaying Its CEO?

Simply Wall St
·3 min read

In 2004 Clynt Nauman was appointed CEO of Alexco Resource Corp. (TSE:AXU). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Alexco Resource

How Does Clynt Nauman's Compensation Compare With Similar Sized Companies?

Our data indicates that Alexco Resource Corp. is worth CA$239m, and total annual CEO compensation was reported as CA$1.1m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at CA$300k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined companies with market caps from US$100m to US$400m, and discovered that the median CEO total compensation of that group was US$695k.

Thus we can conclude that Clynt Nauman receives more in total compensation than the median of a group of companies in the same market, and of similar size to Alexco Resource Corp.. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at Alexco Resource has changed from year to year.

TSX:AXU CEO Compensation, March 2nd 2020
TSX:AXU CEO Compensation, March 2nd 2020

Is Alexco Resource Corp. Growing?

Over the last three years Alexco Resource Corp. has grown its earnings per share (EPS) by an average of 2.4% per year (using a line of best fit). Its revenue is up 138% over last year.

It's hard to interpret the strong revenue growth as anything other than a positive. And in that context, the modest EPS improvement certainly isn't shabby. I'd stop short of saying the business performance is amazing, but there are enough positives to justify further research, or even adding the stock to your watch-list. Shareholders might be interested in this free visualization of analyst forecasts.

Has Alexco Resource Corp. Been A Good Investment?

Alexco Resource Corp. has generated a total shareholder return of 4.1% over three years, so most shareholders wouldn't be too disappointed. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

We examined the amount Alexco Resource Corp. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Over the last three years returns to investors have been uninspiring, and we would have liked to see stronger business growth. Considering this, we wouldn't want to see any big pay rises, although we'd stop short of calling the CEO compensation unfair. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Alexco Resource (free visualization of insider trades).

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

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.