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How Should Investors Feel About 3D Resources Limited's (ASX:DDD) CEO Pay?

Simply Wall St

Peter Mitchell became the CEO of 3D Resources Limited (ASX:DDD) in 2010. 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 we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for 3D Resources

How Does Peter Mitchell's Compensation Compare With Similar Sized Companies?

Our data indicates that 3D Resources Limited is worth AU$1.9m, and total annual CEO compensation is AU$181k. (This is based on the year to June 2018). It is worth noting that the CEO compensation consists almost entirely of the salary, worth AU$181k. We looked at a group of companies with market capitalizations under AU$278m, and the median CEO total compensation was AU$355k.

Most shareholders would consider it a positive that Peter Mitchell takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.

The graphic below shows how CEO compensation at 3D Resources has changed from year to year.

ASX:DDD CEO Compensation, April 15th 2019

Is 3D Resources Limited Growing?

3D Resources Limited has increased its earnings per share (EPS) by an average of 23% a year, over the last three years (using a line of best fit). Its revenue is up 706% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. Although we don't have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has 3D Resources Limited Been A Good Investment?

Given the total loss of 25% over three years, many shareholders in 3D Resources Limited are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

It looks like 3D Resources Limited pays its CEO less than similar sized companies. Since the business is growing, many would argue this suggests the pay is modest. Unfortunately, some shareholders may be disappointed with their returns, given the company's performance over the last three years. So while we don't think, Peter Mitchell is paid too much, shareholders may hope that business performance translates to investment returns before pay rises are given out.

When I see fairly low remuneration, combined with earnings per share growth, but without big share price gains, it makes me want to research the potential for future gains. So you may want to check if insiders are buying 3D Resources shares with their own money (free access).

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.

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.