Luke Graham became the CEO of Strandline Resources Limited (ASX:STA) in 2016, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Strandline Resources pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Strandline Resources Limited's CEO Compensation With the industry
According to our data, Strandline Resources Limited has a market capitalization of AU$99m, and paid its CEO total annual compensation worth AU$906k over the year to June 2020. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$380k.
For comparison, other companies in the industry with market capitalizations below AU$285m, reported a median total CEO compensation of AU$308k. This suggests that Luke Graham is paid more than the median for the industry. What's more, Luke Graham holds AU$1.8m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Speaking on an industry level, nearly 68% of total compensation represents salary, while the remainder of 32% is other remuneration. Strandline Resources pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Strandline Resources Limited's Growth Numbers
Over the last three years, Strandline Resources Limited has shrunk its earnings per share by 8.5% per year. In the last year, its revenue is down 52%.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Strandline Resources Limited Been A Good Investment?
We think that the total shareholder return of 275%, over three years, would leave most Strandline Resources Limited shareholders smiling. 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.
As previously discussed, Luke is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. The company isn't growing EPS, but shareholder returns have been impressive over the last three years. Considering positive investor returns, it would be bold of us to criticize CEO compensation, but shareholders might want to see healthier EPS growth before a raise is given out.
CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 5 warning signs for Strandline Resources you should be aware of, and 2 of them are significant.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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