Here's Why Emerald Resources NL's (ASX:EMR) CEO May Deserve A Raise
The solid performance at Emerald Resources NL (ASX:EMR) has been impressive and shareholders will probably be pleased to know that CEO Morgan Hart has delivered. This would be kept in mind at the upcoming AGM on 24 November 2022 which will be a chance for them to hear the board review the financial results, discuss future company strategy and vote on resolutions such as executive remuneration and other matters. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.
View our latest analysis for Emerald Resources
Comparing Emerald Resources NL's CEO Compensation With The Industry
At the time of writing, our data shows that Emerald Resources NL has a market capitalization of AU$685m, and reported total annual CEO compensation of AU$581k for the year to June 2022. Notably, that's an increase of 62% over the year before. In particular, the salary of AU$471.4k, makes up a huge portion of the total compensation being paid to the CEO.
On examining similar-sized companies in the industry with market capitalizations between AU$296m and AU$1.2b, we discovered that the median CEO total compensation of that group was AU$1.1m. In other words, Emerald Resources pays its CEO lower than the industry median. What's more, Morgan Hart holds AU$45m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2022 | 2021 | Proportion (2022) |
Salary | AU$471k | AU$301k | 81% |
Other | AU$109k | AU$56k | 19% |
Total Compensation | AU$581k | AU$357k | 100% |
On an industry level, roughly 60% of total compensation represents salary and 40% is other remuneration. According to our research, Emerald Resources has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Emerald Resources NL's Growth Numbers
Emerald Resources NL's earnings per share (EPS) grew 84% per year over the last three years. It achieved revenue growth of 983,386% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Emerald Resources NL Been A Good Investment?
Most shareholders would probably be pleased with Emerald Resources NL for providing a total return of 196% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
To Conclude...
Given the improved performance, shareholders may be more forgiving of CEO compensation in the upcoming AGM. Seeing that earnings growth and share price performance seems to be on the right path, the more pressing focus for shareholders at the AGM may be how the board and management plans to turn the company into a sustainably profitable one.
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Emerald Resources that investors should look into moving forward.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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