Here's Why Shareholders May Want To Be Cautious With Increasing Northern Star Resources Limited's (ASX:NST) CEO Pay Packet
Key Insights
Northern Star Resources to hold its Annual General Meeting on 16th of November
Total pay for CEO Stuart Tonkin includes AU$1.67m salary
The total compensation is 57% higher than the average for the industry
Over the past three years, Northern Star Resources' EPS grew by 11% and over the past three years, the total loss to shareholders 9.8%
In the past three years, the share price of Northern Star Resources Limited (ASX:NST) has struggled to generate growth for its shareholders. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 16th of November. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.
See our latest analysis for Northern Star Resources
How Does Total Compensation For Stuart Tonkin Compare With Other Companies In The Industry?
At the time of writing, our data shows that Northern Star Resources Limited has a market capitalization of AU$14b, and reported total annual CEO compensation of AU$6.3m for the year to June 2023. That's a notable increase of 35% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$1.7m.
In comparison with other companies in the Australian Metals and Mining industry with market capitalizations ranging from AU$6.3b to AU$19b, the reported median CEO total compensation was AU$4.0m. Hence, we can conclude that Stuart Tonkin is remunerated higher than the industry median. Moreover, Stuart Tonkin also holds AU$14m worth of Northern Star Resources stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2023 | 2022 | Proportion (2023) |
Salary | AU$1.7m | AU$1.6m | 27% |
Other | AU$4.6m | AU$3.0m | 73% |
Total Compensation | AU$6.3m | AU$4.7m | 100% |
On an industry level, around 61% of total compensation represents salary and 39% is other remuneration. In Northern Star Resources' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Northern Star Resources Limited's Growth Numbers
Northern Star Resources Limited's earnings per share (EPS) grew 11% per year over the last three years. In the last year, its revenue is up 8.5%.
Shareholders would be glad to know that the company has improved itself over the last few years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Northern Star Resources Limited Been A Good Investment?
Since shareholders would have lost about 9.8% over three years, some Northern Star Resources Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
In Summary...
The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.
Whatever your view on compensation, you might want to check if insiders are buying or selling Northern Star Resources shares (free trial).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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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.
