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Does Great Southern Mining Limited's (ASX:GSN) CEO Pay Compare Well With Peers?

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John Terpu is the CEO of Great Southern Mining Limited (ASX:GSN). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Great Southern Mining

How Does John Terpu's Compensation Compare With Similar Sized Companies?

Our data indicates that Great Southern Mining Limited is worth AU$23m, and total annual CEO compensation was reported as AU$270k for the year to June 2019. While we always look at total compensation first, we note that the salary component is less, at AU$210k. We took a group of companies with market capitalizations below AU$312m, and calculated the median CEO total compensation to be AU$389k.

Next, let's break down remuneration compositions to understand how the industry and company compare with each other. On a sector level, around 69% of total compensation represents salary and 31% is other remuneration. So it seems like there isn't a significant difference between Great Southern Mining and the broader market, in terms of salary allocation in the overall compensation package.

Most shareholders would consider it a positive that John Terpu takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it's important we delve into the performance of the actual business. You can see, below, how CEO compensation at Great Southern Mining has changed over time.

ASX:GSN CEO Compensation May 18th 2020
ASX:GSN CEO Compensation May 18th 2020

Is Great Southern Mining Limited Growing?

Over the last three years Great Southern Mining Limited has shrunk its earnings per share by an average of 57% per year (measured with a line of best fit). It saw its revenue drop 86% over the last year.

Sadly for shareholders, earnings per share are actually down, over three years. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Great Southern Mining Limited Been A Good Investment?

Most shareholders would probably be pleased with Great Southern Mining Limited for providing a total return of 176% over three years. 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...

Great Southern Mining Limited is currently paying its CEO below what is normal for companies of its size.

It's well worth noting that while John Terpu is paid less than most company leaders (at similar sized companies), there isn't much EPS growth. Having said that, returns to shareholders have been great. We would like to see EPS growth, but in our view it seems the CEO is remunerated reasonably. Shifting gears from CEO pay for a second, we've spotted 6 warning signs for Great Southern Mining you should be aware of, and 2 of them can't be ignored.

Important note: Great Southern Mining 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.