U.S. Markets closed

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

Simply Wall St

Jamie Sullivan has been the CEO of GME Resources Limited (ASX:GME) since 2012. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for GME Resources

How Does Jamie Sullivan's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that GME Resources Limited has a market cap of AU$28m, and is paying total annual CEO compensation of AU$180k. (This figure is for the year to June 2018). We think total compensation is more important but we note that the CEO salary is lower, at AU$164k. We examined a group of similar sized companies, with market capitalizations of below AU$286m. The median CEO total compensation in that group is AU$355k.

Most shareholders would consider it a positive that Jamie Sullivan 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.

You can see a visual representation of the CEO compensation at GME Resources, below.

ASX:GME CEO Compensation, July 24th 2019

Is GME Resources Limited Growing?

GME Resources Limited has increased its earnings per share (EPS) by an average of 19% a year, over the last three years (using a line of best fit). It has seen most of its revenue evaporate over the past year.

This shows that the company has improved itself over the last few years. Good news for shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has GME Resources Limited Been A Good Investment?

Boasting a total shareholder return of 102% over three years, GME Resources Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

It appears that GME Resources Limited remunerates its CEO below most similar sized companies. Since the business is growing, many would argue this suggests the pay is modest. The pleasing shareholder returns are the cherry on top; you might even consider that Jamie Sullivan deserves a raise!

It is relatively rare to see a modestly paid CEO when performance is so impressive. It would be even more positive if company insiders are buying shares. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling GME Resources (free visualization of insider trades).

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.