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In 2012 Chris Ellison was appointed CEO of Mineral Resources Limited (ASX:MIN). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. 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 Chris Ellison's Compensation Compare With Similar Sized Companies?
Our data indicates that Mineral Resources Limited is worth AU$2.8b, and total annual CEO compensation is AU$4.7m. (This number is for the twelve months until June 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$1.5m. We looked at a group of companies with market capitalizations from AU$1.4b to AU$4.6b, and the median CEO total compensation was AU$2.4m.
Thus we can conclude that Chris Ellison receives more in total compensation than the median of a group of companies in the same market, and of similar size to Mineral Resources Limited. However, this doesn't necessarily mean the pay is too high. 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 Mineral Resources has changed from year to year.
Is Mineral Resources Limited Growing?
Mineral Resources Limited has increased its earnings per share (EPS) by an average of 50% a year, over the last three years (using a line of best fit). Its revenue is down -13% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. It could be important to check this free visual depiction of what analysts expect for the future.
Has Mineral Resources Limited Been A Good Investment?
Most shareholders would probably be pleased with Mineral Resources Limited for providing a total return of 98% 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.
We examined the amount Mineral Resources Limited 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.
Importantly, though, the company has impressed with its earnings per share growth, over three years. In addition, shareholders have done well over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. Whatever your view on compensation, you might want to check if insiders are buying or selling Mineral Resources shares (free trial).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.