This article will reflect on the compensation paid to Chris Daws who has served as CEO of Estrella Resources Limited (ASX:ESR) since 2017. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Estrella Resources.
How Does Total Compensation For Chris Daws Compare With Other Companies In The Industry?
Our data indicates that Estrella Resources Limited has a market capitalization of AU$106m, and total annual CEO compensation was reported as AU$268k for the year to June 2020. That's mostly flat as compared to the prior year's compensation. In particular, the salary of AU$234.0k, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations under AU$279m, the reported median total CEO compensation was AU$308k. From this we gather that Chris Daws is paid around the median for CEOs in the industry. Moreover, Chris Daws also holds AU$1.6m worth of Estrella Resources stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 70% of total compensation represents salary and 30% is other remuneration. Estrella Resources pays out 87% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Estrella Resources Limited's Growth
Estrella Resources Limited has seen its earnings per share (EPS) increase by 34% a year over the past three years. It has seen most of its revenue evaporate over the past year.
This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Estrella Resources Limited Been A Good Investment?
We think that the total shareholder return of 350%, over three years, would leave most Estrella Resources Limited shareholders smiling. 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.
As we touched on above, Estrella Resources Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Investors would surely be happy to see that returns have been great, and that EPS is up. Although the pay is close to the industry median, overall performance is excellent, so we don't think the CEO is paid too generously. In fact, shareholders might even think the CEO deserves a raise as a reward due to the fantastic returns generated.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 1 which is potentially serious) in Estrella Resources we think you should know about.
Switching gears from Estrella Resources, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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