James Brown became the CEO of Altura Mining Limited (ASX:AJM) in 2010. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does James Brown's Compensation Compare With Similar Sized Companies?
According to our data, Altura Mining Limited has a market capitalization of AU$119m, and paid its CEO total annual compensation worth AU$800k over the year to June 2019. We think total compensation is more important but we note that the CEO salary is lower, at AU$436k. We took a group of companies with market capitalizations below AU$287m, and calculated the median CEO total compensation to be AU$381k.
As you can see, James Brown is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Altura Mining Limited is paying too much. 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 Altura Mining has changed from year to year.
Is Altura Mining Limited Growing?
Over the last three years Altura Mining Limited has grown its earnings per share (EPS) by an average of 50% per year (using a line of best fit). In the last year, its revenue is up 3282%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. 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 Altura Mining Limited Been A Good Investment?
With a three year total loss of 64%, Altura Mining Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
We compared total CEO remuneration at Altura Mining Limited with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
However we must not forget that the EPS growth has been very strong over three years. 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. So you may want to check if insiders are buying Altura Mining shares with their own money (free access).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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