In 2014 Neil McIntyre was appointed CEO of Diatreme Resources Limited (ASX:DRX). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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. This process should give us an idea about how appropriately the CEO is paid.
How Does Neil McIntyre's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Diatreme Resources Limited has a market cap of AU$20m, and reported total annual CEO compensation of AU$241k for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at AU$220k. We looked at a group of companies with market capitalizations under AU$296m, and the median CEO total compensation was AU$379k.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at Diatreme Resources has changed from year to year.
Is Diatreme Resources Limited Growing?
Diatreme Resources Limited has increased its earnings per share (EPS) by an average of 18% a year, over the last three years (using a line of best fit). It achieved revenue growth of 32% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. Although we don't have analyst forecasts you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Diatreme Resources Limited Been A Good Investment?
Since shareholders would have lost about 27% over three years, some Diatreme Resources Limited shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
It looks like Diatreme Resources Limited pays its CEO less than similar sized companies.
Since the business is growing, many would argue this suggests the pay is modest. Unfortunately, some shareholders may be disappointed with their returns, given the company's performance over the last three years. So while we don't think, Neil McIntyre is paid too much, shareholders may hope that business performance translates to investment returns before pay rises are given out. This sort of circumstance certainly justifies further research, because the investment returns might still come in the future. Whatever your view on compensation, you might want to check if insiders are buying or selling Diatreme Resources shares (free trial).
If you want to buy a stock that is better than Diatreme Resources, this free list of high return, low debt companies is a great place to look.
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