In 2016 Trangie Johnston was appointed CEO of Broken Hill Prospecting Limited (ASX:BPL). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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.
How Does Trangie Johnston’s Compensation Compare With Similar Sized Companies?
Our data indicates that Broken Hill Prospecting Limited is worth AU$3.1m, and total annual CEO compensation is AU$509k. (This figure is for the year to June 2018). We think total compensation is more important but we note that the CEO salary is lower, at AU$343k. We examined a group of similar sized companies, with market capitalizations of below AU$282m. The median CEO total compensation in that group is AU$354k.
Thus we can conclude that Trangie Johnston receives more in total compensation than the median of a group of companies in the same market, and of similar size to Broken Hill Prospecting Limited. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Broken Hill Prospecting has changed from year to year.
Is Broken Hill Prospecting Limited Growing?
On average over the last three years, Broken Hill Prospecting Limited has shrunk earnings per share by 22% each year (measured with a line of best fit). It saw its revenue drop -90% over the last year.
Unfortunately, earnings per share have trended lower over the last three years. And the fact that revenue is down year on year arguably paints an ugly picture. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don’t have analyst forecasts, you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Broken Hill Prospecting Limited Been A Good Investment?
Given the total loss of 16% over three years, many shareholders in Broken Hill Prospecting Limited are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared the total CEO remuneration paid by Broken Hill Prospecting Limited, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
We think many shareholders would be underwhelmed with the business growth over the last three years.
Over the same period, investors would have come away with nothing in the way of share price gains. This analysis suggests to us that the CEO is paid too generously! So you may want to check if insiders are buying Broken Hill Prospecting shares with their own money (free access).
If you want to buy a stock that is better than Broken Hill Prospecting, this free list of high return, low debt companies is a great place to look.
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.