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Is BCI Minerals Limited's (ASX:BCI) CEO Salary Justified?

Simply Wall St

Alwyn Vorster has been the CEO of BCI Minerals Limited (ASX:BCI) since 2016. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. 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.

Check out our latest analysis for BCI Minerals

How Does Alwyn Vorster's Compensation Compare With Similar Sized Companies?

According to our data, BCI Minerals Limited has a market capitalization of AU$50m, and paid its CEO total annual compensation worth AU$637k over the year to June 2019. While we always look at total compensation first, we note that the salary component is less, at AU$479k. We examined a group of similar sized companies, with market capitalizations of below AU$334m. The median CEO total compensation in that group is AU$404k.

It would therefore appear that BCI Minerals Limited pays Alwyn Vorster more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration 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 BCI Minerals has changed from year to year.

ASX:BCI CEO Compensation, March 18th 2020

Is BCI Minerals Limited Growing?

On average over the last three years, BCI Minerals Limited has grown earnings per share (EPS) by 80% each year (using a line of best fit). In the last year, its revenue is up 105%.

This demonstrates that the company has been improving recently. A good result. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. You might want to check this free visual report on analyst forecasts for future earnings.

Has BCI Minerals Limited Been A Good Investment?

Since shareholders would have lost about 38% over three years, some BCI Minerals Limited shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We compared the total CEO remuneration paid by BCI Minerals Limited, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

However, the earnings per share growth over three years is certainly impressive. Having said that, shareholders may be disappointed with the weak returns over the last three years. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. Looking into other areas, we've picked out 3 warning signs for BCI Minerals that investors should think about before committing capital to this stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

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.