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Shareholders will probably not be disappointed by the robust results at Energy Metals Limited (ASX:EME) recently and they will be keeping this in mind as they go into the AGM on 28 May 2021. They will probably be more interested in hearing the board discuss future initiatives to further improve the business as they vote on resolutions such as executive remuneration. We have prepared some analysis below and we show why we think CEO compensation looks decent with even the possibility for a raise.
How Does Total Compensation For Shuqing Xiao Compare With Other Companies In The Industry?
Our data indicates that Energy Metals Limited has a market capitalization of AU$43m, and total annual CEO compensation was reported as AU$194k for the year to December 2020. This was the same as last year. In particular, the salary of AU$180.0k, makes up a huge portion of the total compensation being paid to the CEO.
For comparison, other companies in the industry with market capitalizations below AU$257m, reported a median total CEO compensation of AU$325k. In other words, Energy Metals pays its CEO lower than the industry median.
Speaking on an industry level, nearly 68% of total compensation represents salary, while the remainder of 32% is other remuneration. Energy Metals pays out 93% 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.
A Look at Energy Metals Limited's Growth Numbers
Energy Metals Limited has seen its earnings per share (EPS) increase by 3.6% a year over the past three years. Its revenue is down 18% over the previous year.
We generally like to see a little revenue growth, but it is good to see a modest EPS growth at least. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Energy Metals Limited Been A Good Investment?
Most shareholders would probably be pleased with Energy Metals Limited for providing a total return of 86% 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.
Overall, the company hasn't done too poorly performance-wise, but we would like to see some improvement. If it manages to keep up the current streak, CEO remuneration could well be one of shareholders' least concerns. Rather, investors would more likely want to engage on discussions related to key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 3 warning signs for Energy Metals (of which 1 doesn't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.
Switching gears from Energy Metals, 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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