Shareholders May Be More Conservative With Petra Diamonds Limited's (LON:PDL) CEO Compensation For Now
Key Insights
Petra Diamonds will host its Annual General Meeting on 14th of November
Total pay for CEO Richard Duffy includes US$580.1k salary
The overall pay is 446% above the industry average
Petra Diamonds' EPS grew by 101% over the past three years while total shareholder loss over the past three years was 33%
In the past three years, the share price of Petra Diamonds Limited (LON:PDL) has struggled to grow and now shareholders are sitting on a loss. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 14th of November could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.
View our latest analysis for Petra Diamonds
Comparing Petra Diamonds Limited's CEO Compensation With The Industry
According to our data, Petra Diamonds Limited has a market capitalization of UK£95m, and paid its CEO total annual compensation worth US$1.3m over the year to June 2023. That's a fairly small increase of 4.4% over the previous year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$580k.
For comparison, other companies in the British Metals and Mining industry with market capitalizations below UK£163m, reported a median total CEO compensation of US$242k. This suggests that Richard Duffy is paid more than the median for the industry. Moreover, Richard Duffy also holds UK£133k worth of Petra Diamonds stock directly under their own name.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$580k | US$530k | 44% |
Other | US$740k | US$734k | 56% |
Total Compensation | US$1.3m | US$1.3m | 100% |
Speaking on an industry level, nearly 64% of total compensation represents salary, while the remainder of 36% is other remuneration. Petra Diamonds sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Petra Diamonds Limited's Growth
Over the past three years, Petra Diamonds Limited has seen its earnings per share (EPS) grow by 101% per year. In the last year, its revenue is down 42%.
Shareholders would be glad to know that the company has improved itself over the last few years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Petra Diamonds Limited Been A Good Investment?
With a total shareholder return of -33% over three years, Petra Diamonds Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.
In Summary...
The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 1 warning sign for Petra Diamonds that investors should think about before committing capital to this stock.
Important note: Petra Diamonds is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
