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Is Emmerson Resources Limited's (ASX:ERM) CEO Pay Justified?

Simply Wall St

In 2007 Rob Bills was appointed CEO of Emmerson Resources Limited (ASX:ERM). First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. 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 Emmerson Resources

How Does Rob Bills's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Emmerson Resources Limited has a market cap of AU$45m, and reported total annual CEO compensation of AU$398k for the year to June 2019. That's less than last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$368k. We looked at a group of companies with market capitalizations under AU$289m, and the median CEO total compensation was AU$377k.

That means Rob Bills receives fairly typical remuneration for the CEO of a company that size. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.

The graphic below shows how CEO compensation at Emmerson Resources has changed from year to year.

ASX:ERM CEO Compensation, November 2nd 2019

Is Emmerson Resources Limited Growing?

Over the last three years Emmerson Resources Limited has grown its earnings per share (EPS) by an average of 21% per year (using a line of best fit). Its revenue is down 82% over last year.

This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Although we don't have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Emmerson Resources Limited Been A Good Investment?

With a three year total loss of 32%, Emmerson Resources Limited would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

Remuneration for Rob Bills is close enough to the median pay for a CEO of a similar sized company .

We like that the company is growing EPS, but it's disappointing to see negative shareholder returns over three years. We'd be surprised if shareholders want to see a pay rise for the CEO, but we'd stop short of calling their pay too generous. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Emmerson Resources (free visualization of insider trades).

Important note: Emmerson 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.

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.

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. Thank you for reading.