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Does Alkane Resources Limited's (ASX:ALK) CEO Salary Reflect Performance?

Simply Wall St

In 2017 Nic Earner was appointed CEO of Alkane Resources Limited (ASX:ALK). First, this article will compare CEO compensation with compensation at similar sized companies. 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 method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Alkane Resources

How Does Nic Earner's Compensation Compare With Similar Sized Companies?

Our data indicates that Alkane Resources Limited is worth AU$415m, and total annual CEO compensation was reported as AU$1.0m for the year to June 2019. We think total compensation is more important but we note that the CEO salary is lower, at AU$467k. When we examined a selection of companies with market caps ranging from AU$153m to AU$614m, we found the median CEO total compensation was AU$846k.

So Nic Earner receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

You can see, below, how CEO compensation at Alkane Resources has changed over time.

ASX:ALK CEO Compensation, March 12th 2020

Is Alkane Resources Limited Growing?

Alkane Resources Limited has increased its earnings per share (EPS) by an average of 89% a year, over the last three years (using a line of best fit). It saw its revenue drop 39% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. It could be important to check this free visual depiction of what analysts expect for the future.

Has Alkane Resources Limited Been A Good Investment?

Boasting a total shareholder return of 123% over three years, Alkane Resources Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Nic Earner is paid around what is normal for the leaders of comparable size companies.

Shareholders would surely be happy to see that shareholder returns have been great, and the earnings per share are up. Although the pay is a normal amount, some shareholders probably consider it fair or modest, given the good performance of the stock. On another note, Alkane Resources has 2 warning signs (and 1 which makes us a bit uncomfortable) we think you should know about.

Important note: Alkane Resources may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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.