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Is Buxton Resources Limited's (ASX:BUX) CEO Being Overpaid?

Simply Wall St

Eamon Hannon has been the CEO of Buxton Resources Limited (ASX:BUX) since 2014. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. 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 Buxton Resources

How Does Eamon Hannon's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Buxton Resources Limited has a market cap of AU$11m, and reported total annual CEO compensation of AU$496k for the year to June 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$180k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined a group of similar sized companies, with market capitalizations of below AU$286m. The median CEO total compensation in that group is AU$379k.

As you can see, Eamon Hannon is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Buxton Resources Limited is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at Buxton Resources has changed from year to year.

ASX:BUX CEO Compensation, January 1st 2020

Is Buxton Resources Limited Growing?

On average over the last three years, Buxton Resources Limited has shrunk earnings per share by 11% each year (measured with a line of best fit). It achieved revenue growth of 335% over the last year.

The reduction in earnings per share, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. We don't have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Buxton Resources Limited Been A Good Investment?

Since shareholders would have lost about 51% over three years, some Buxton Resources 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 examined the amount Buxton Resources Limited pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. Shareholders may wish to consider further research. Although we don't think the CEO pay is too high, it is probably more on the generous side of things. Whatever your view on compensation, you might want to check if insiders are buying or selling Buxton Resources shares (free trial).

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.