In 2013 Matthew Yates was appointed CEO of OreCorp Limited (ASX:ORR). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Matthew Yates's Compensation Compare With Similar Sized Companies?
Our data indicates that OreCorp Limited is worth AU$115m, and total annual CEO compensation was reported as AU$512k for the year to June 2019. We think total compensation is more important but we note that the CEO salary is lower, at AU$375k. We examined a group of similar sized companies, with market capitalizations of below AU$290m. The median CEO total compensation in that group is AU$380k.
As you can see, Matthew Yates is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean OreCorp Limited is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at OreCorp has changed from year to year.
Is OreCorp Limited Growing?
On average over the last three years, OreCorp Limited has grown earnings per share (EPS) by 21% each year (using a line of best fit). Its revenue is up 140% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Although we don't have analyst forecasts you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has OreCorp Limited Been A Good Investment?
Given the total loss of 17% over three years, many shareholders in OreCorp Limited are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
We compared the total CEO remuneration paid by OreCorp Limited, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
However we must not forget that the EPS growth has been very strong over three years. On the other hand returns to investors over the same period have probably disappointed many. Considering the per share profit growth, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling OreCorp shares (free trial).
Important note: OreCorp may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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