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Andy Tudor became the CEO of Nexus Minerals Limited (ASX:NXM) in 2014, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Nexus Minerals Limited's CEO Compensation With the industry
At the time of writing, our data shows that Nexus Minerals Limited has a market capitalization of AU$24m, and reported total annual CEO compensation of AU$315k for the year to June 2020. That's a fairly small increase of 5.1% over the previous year. Notably, the salary which is AU$251.1k, represents most of the total compensation being paid.
For comparison, other companies in the industry with market capitalizations below AU$258m, reported a median total CEO compensation of AU$309k. From this we gather that Andy Tudor is paid around the median for CEOs in the industry. What's more, Andy Tudor holds AU$160k worth of shares in the company in their own name.
On an industry level, around 69% of total compensation represents salary and 31% is other remuneration. Nexus Minerals pays out 80% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Nexus Minerals Limited's Growth
Nexus Minerals Limited's earnings per share (EPS) grew 23% per year over the last three years. The trailing twelve months of revenue was pretty much the same as the prior period.
This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Nexus Minerals Limited Been A Good Investment?
With a three year total loss of 11% for the shareholders, Nexus Minerals Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
As previously discussed, Andy is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, the company has logged negative shareholder returns over the previous three years. However, EPS growth is positive over the same time frame. Overall, we wouldn't say Andy is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.
CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 6 warning signs for Nexus Minerals (of which 3 are concerning!) that you should know about in order to have a holistic understanding of the stock.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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