In 2009 Mark Thompson was appointed CEO of Talga Resources Limited (ASX:TLG). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Mark Thompson's Compensation Compare With Similar Sized Companies?
According to our data, Talga Resources Limited has a market capitalization of AU$116m, and paid its CEO total annual compensation worth AU$1.3m over the year to June 2019. We note that's an increase of 66% above last year. While we always look at total compensation first, we note that the salary component is less, at AU$361k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations under AU$292m, and the median CEO total compensation was AU$380k.
Thus we can conclude that Mark Thompson receives more in total compensation than the median of a group of companies in the same market, and of similar size to Talga 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.
You can see a visual representation of the CEO compensation at Talga Resources, below.
Is Talga Resources Limited Growing?
Over the last three years Talga Resources Limited has shrunk its earnings per share by an average of 6.3% per year (measured with a line of best fit). It achieved revenue growth of 2.7% over the last year.
Unfortunately, earnings per share have trended lower over the last three years. The fairly low revenue growth fails to impress given that the earnings per share is down. 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 shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Talga Resources Limited Been A Good Investment?
Boasting a total shareholder return of 66% over three years, Talga Resources Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
We compared total CEO remuneration at Talga Resources Limited with the amount paid at companies with a similar market capitalization. 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. However, we can't argue with the strong returns to shareholders, over the same time period. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Talga Resources.
Important note: Talga Resources may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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