David Richards has been the CEO of Liontown Resources Limited (ASX:LTR) since 2010. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. 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 David Richards's Compensation Compare With Similar Sized Companies?
Our data indicates that Liontown Resources Limited is worth AU$152m, and total annual CEO compensation was reported as AU$390k for the year to June 2019. That's below the compensation, last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$263k. We took a group of companies with market capitalizations below AU$292m, and calculated the median CEO total compensation to be AU$378k.
So David Richards receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
You can see a visual representation of the CEO compensation at Liontown Resources, below.
Is Liontown Resources Limited Growing?
Over the last three years Liontown Resources Limited has shrunk its earnings per share by an average of 70% per year (measured with a line of best fit). In the last year, its revenue is down 6.7%.
Unfortunately, earnings per share have trended lower over the last three years. 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. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Liontown Resources Limited Been A Good Investment?
Most shareholders would probably be pleased with Liontown Resources Limited for providing a total return of 354% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
David Richards is paid around the same as most CEOs of similar size companies.
We're not seeing great strides in earnings per share, but the company has clearly pleased some investors, given the returns over the last three years. So we think most shareholders wouldn't be too worried about CEO compensation, which is close to the median for similar sized companies. So you may want to check if insiders are buying Liontown Resources shares with their own money (free access).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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