This article will reflect on the compensation paid to Ross Brown who has served as CEO of Inca Minerals Limited (ASX:ICG) since 2012. This analysis will also assess whether Inca Minerals pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Inca Minerals Limited's CEO Compensation With the industry
At the time of writing, our data shows that Inca Minerals Limited has a market capitalization of AU$17m, and reported total annual CEO compensation of AU$277k for the year to June 2020. Notably, that's a decrease of 13% over the year before. Notably, the salary which is AU$255.7k, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations under AU$284m, the reported median total CEO compensation was AU$313k. So it looks like Inca Minerals compensates Ross Brown in line with the median for the industry. Furthermore, Ross Brown directly owns AU$100k worth of shares in the company.
Talking in terms of the industry, salary represented approximately 70% of total compensation out of all the companies we analyzed, while other remuneration made up 30% of the pie. It's interesting to note that Inca Minerals pays out a greater portion of remuneration through salary, compared to the industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
Inca Minerals Limited's Growth
Over the past three years, Inca Minerals Limited has seen its earnings per share (EPS) grow by 9.7% per year. In the last year, its revenue is down 87%.
We would argue that the lack of revenue growth in the last year is less than ideal, but the modest improvement in EPS is good. 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. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Inca Minerals Limited Been A Good Investment?
With a three year total loss of 53% for the shareholders, Inca Minerals Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we touched on above, Inca Minerals Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Meanwhile, Inca Minerals is suffering from adverse shareholder returns and althoughEPS have grown over the past three years, they have not been extraordinary. Although we wouldn't say CEO compensation is exceptionally high, it isn't very low either. Shareholders might want to see substantial improvements in returns before agreeing that Ross deserves a raise.
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. We identified 4 warning signs for Inca Minerals (2 shouldn't be ignored!) that you should be aware of before investing here.
Important note: Inca Minerals is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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