Karl Simich became the CEO of Sandfire Resources NL (ASX:SFR) in 2009. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Karl Simich's Compensation Compare With Similar Sized Companies?
According to our data, Sandfire Resources NL has a market capitalization of AU$882m, and pays its CEO total annual compensation worth AU$1.6m. (This number is for the twelve months until June 2019). That's less than last year. While we always look at total compensation first, we note that the salary component is less, at AU$1.1m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of AU$295m to AU$1.2b. The median total CEO compensation was AU$970k.
It would therefore appear that Sandfire Resources NL pays Karl Simich more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see a visual representation of the CEO compensation at Sandfire Resources, below.
Is Sandfire Resources NL Growing?
Over the last three years Sandfire Resources NL has grown its earnings per share (EPS) by an average of 24% per year (using a line of best fit). Revenue was pretty flat on last 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. You might want to check this free visual report on analyst forecasts for future earnings.
Has Sandfire Resources NL Been A Good Investment?
With a total shareholder return of 18% over three years, Sandfire Resources NL shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
We compared the total CEO remuneration paid by Sandfire Resources NL, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
However we must not forget that the EPS growth has been very strong over three years. Looking at the same time period, we think that the shareholder returns are respectable. So, considering the EPS growth we do not wish to criticize the level of CEO compensation, though we'd recommend further research on management. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Sandfire Resources (free visualization of insider trades).
If you want to buy a stock that is better than Sandfire Resources, this free list of high return, low debt companies is a great place to look.
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