Is Lithium Australia NL’s (ASX:LIT) CEO Overpaid Relative To Its Peers?
Adrian Griffin became the CEO of Lithium Australia NL (ASX:LIT) in 2011. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
See our latest analysis for Lithium Australia
How Does Adrian Griffin’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Lithium Australia NL has a market cap of AU$45m, and is paying total annual CEO compensation of AU$705k. That’s a notable increase of 48% on last year. We examined a group of similar sized companies, with market capitalizations of below AU$277m. The median CEO compensation in that group is AU$355k.
It would therefore appear that Lithium Australia NL pays Adrian Griffin 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 get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see, below, how CEO compensation at Lithium Australia has changed over time.
Is Lithium Australia NL Growing?
Over the last three years Lithium Australia NL has shrunk its earnings per share by an average of 3.2% per year. It saw its revenue drop -48% over the last year.
Few shareholders would be pleased to read that earnings per share are lower over 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 shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Lithium Australia NL Been A Good Investment?
Lithium Australia NL has generated a total shareholder return of 1.0% over three years, so most shareholders wouldn’t be too disappointed. But they would probably prefer not to see CEO compensation far in excess of the median.
In Summary…
We examined the amount Lithium Australia NL pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Earnings per share have not grown in three years, and the revenue growth fails to impress us.
While shareholder returns are acceptable, they don’t delight. We also note that the CEO compensation is well up on last year. So we think more research is needed, but we don’t think the CEO underpaid. Whatever your view on compensation, you might want to check if insiders are buying or selling Lithium Australia NL shares (free trial).
Or you might prefer examine intently this intuitive graph showing past earnings and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
