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Does Castle Minerals Limited's (ASX:CDT) CEO Salary Reflect Performance?

Simply Wall St

Stephen Stone has been the CEO of Castle Minerals Limited (ASX:CDT) since 2016. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Castle Minerals

How Does Stephen Stone's Compensation Compare With Similar Sized Companies?

Our data indicates that Castle Minerals Limited is worth AU$2.1m, and total annual CEO compensation was reported as AU$130k for the year to June 2019. We think total compensation is more important but we note that the CEO salary is lower, at AU$119k. We examined a group of similar sized companies, with market capitalizations of below AU$289m. The median CEO total compensation in that group is AU$379k.

A first glance this seems like a real positive for shareholders, since Stephen Stone is paid less than the average total compensation paid by similar sized companies. However, before we heap on the praise, we should delve deeper to understand business performance.

You can see a visual representation of the CEO compensation at Castle Minerals, below.

ASX:CDT CEO Compensation, January 14th 2020
ASX:CDT CEO Compensation, January 14th 2020

Is Castle Minerals Limited Growing?

On average over the last three years, Castle Minerals Limited has shrunk earnings per share by 8.6% each year (measured with a line of best fit). Its revenue is down 57% over last year.

Unfortunately, earnings per share have trended lower over the last three years. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Castle Minerals Limited Been A Good Investment?

Given the total loss of 47% over three years, many shareholders in Castle Minerals Limited are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Castle Minerals Limited is currently paying its CEO below what is normal for companies of its size.

Shareholders should note that compensation for Stephen Stone is under the median of a group of similar sized companies. But then, EPS growth is lacking and so are the returns to shareholders. While one could argue it is appropriate for the CEO to be paid less than other CEOs of similar sized companies, given company performance, we would not call the pay overly generous. So you may want to check if insiders are buying Castle Minerals shares with their own money (free access).

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.