How Much Did PPX Mining Corp’s (CVE:PPX) CEO Pocket Last Year?
Brian Maher is the CEO of PPX Mining Corp (TSXV:PPX), which has recently grown to a market capitalization of CA$42.55M. Recognizing whether CEO incentives are aligned with shareholders is a crucial part of investing. This is because, if incentives are aligned, more value is created for shareholders which directly impacts your returns as an investor. Today we will assess Maher’s pay and compare this to the company’s performance over the same period, as well as measure it against other Canadian CEOs leading companies of similar size and profitability. View our latest analysis for PPX Mining
Did Maher create value?
PPX can create value to shareholders by increasing its profitability, which in turn is reflected into the share price and the investor’s ability to sell their shares at higher capital gains. Over the last year PPX produced negative earnings of -CA$8.44M , which is a further decline from prior year’s loss of -CA$3.79M. Furthermore, on average, PPX has been loss-making in the past, with a 5-year average EPS of -CA$0.043. During times of negative earnings, the company may be going through a period of reinvestment and growth, or it can be a sign of some headwind. Regardless, CEO compensation should mirror the current condition of the business. In the latest financial report, Maher’s total compensation rose by a mere 1.59% to CA$448.45K. Moreover, Maher’s pay is also made up of 62.87% non-cash elements, which means that fluctuations in PPX’s share price can affect the actual level of what the CEO actually receives.
Is PPX’s CEO overpaid relative to the market?
Despite the fact that there is no cookie-cutter approach, since remuneration should account for specific factors of the company and market, we can evaluate a high-level thresold to see if PPX deviates substantially from its peers. This exercise can help direct shareholders to ask the right question about Maher’s incentive alignment. Typically, a Canadian small-cap is worth around $345M, creates earnings of $24M, and pays its CEO circa $770,000 per year. Normally I would look at market cap and earnings as a proxy for performance, however, PPX’s negative earnings reduces the effectiveness of this method. Analyzing the range of remuneration for small-cap executives, it seems like Maher is remunerated sensibly relative to peers. On the whole, although PPX is unprofitable, it seems like the CEO’s pay is reflective of the appropriate level.
Next Steps:
You can breathe easy knowing that shareholder funds aren’t being used to overpay PPX’s CEO. However, on the flipside, you should ask whether Maher is appropriately remunerated on the basis of retention. Its important for shareholders to be active in voting governance decisions, as board members are only representatives of investors’ voices. If you have not done so already, I highly recommend you to complete your research by taking a look at the following:
Governance: To find out more about PPX’s governance, look through our infographic report of the company’s board and management.
Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of PPX? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass 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.
