Shareholders Will Most Likely Find Encounter Resources Limited's (ASX:ENR) CEO Compensation Acceptable
Key Insights
Encounter Resources to hold its Annual General Meeting on 24th of November
Total pay for CEO Will Robinson includes AU$270.0k salary
Total compensation is similar to the industry average
Encounter Resources' EPS declined by 7.0% over the past three years while total shareholder return over the past three years was 164%
Encounter Resources Limited (ASX:ENR) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 24th of November. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.
View our latest analysis for Encounter Resources
Comparing Encounter Resources Limited's CEO Compensation With The Industry
At the time of writing, our data shows that Encounter Resources Limited has a market capitalization of AU$155m, and reported total annual CEO compensation of AU$449k for the year to June 2023. That's a notable increase of 35% on last year. In particular, the salary of AU$270.0k, makes up a huge portion of the total compensation being paid to the CEO.
On comparing similar-sized companies in the Australian Metals and Mining industry with market capitalizations below AU$308m, we found that the median total CEO compensation was AU$387k. This suggests that Encounter Resources remunerates its CEO largely in line with the industry average. What's more, Will Robinson holds AU$11m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2023 | 2022 | Proportion (2023) |
Salary | AU$270k | AU$270k | 60% |
Other | AU$179k | AU$62k | 40% |
Total Compensation | AU$449k | AU$332k | 100% |
Speaking on an industry level, nearly 61% of total compensation represents salary, while the remainder of 39% is other remuneration. Encounter Resources is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
Encounter Resources Limited's Growth
Encounter Resources Limited has reduced its earnings per share by 7.0% a year over the last three years. Its revenue is down 98% over the previous year.
Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Encounter Resources Limited Been A Good Investment?
Most shareholders would probably be pleased with Encounter Resources Limited for providing a total return of 164% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
To Conclude...
While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 3 warning signs (and 1 which is potentially serious) in Encounter Resources we think you should know about.
Switching gears from Encounter Resources, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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.
