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We Think Shareholders Will Probably Be Generous With New World Resources Limited's (ASX:NWC) CEO Compensation

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·3 min read
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  • NWC.AX

It would be hard to discount the role that CEO Mike Haynes has played in delivering the impressive results at New World Resources Limited (ASX:NWC) recently. The pleasing results would be something shareholders would keep in mind at the upcoming AGM on 25 November 2021. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.

Check out our latest analysis for New World Resources

Comparing New World Resources Limited's CEO Compensation With the industry

Our data indicates that New World Resources Limited has a market capitalization of AU$121m, and total annual CEO compensation was reported as AU$427k for the year to June 2021. That's a notable increase of 18% on last year. Notably, the salary which is AU$280.9k, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below AU$275m, we found that the median total CEO compensation was AU$354k. From this we gather that Mike Haynes is paid around the median for CEOs in the industry. Furthermore, Mike Haynes directly owns AU$2.9m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2021

2020

Proportion (2021)

Salary

AU$281k

AU$268k

66%

Other

AU$146k

AU$94k

34%

Total Compensation

AU$427k

AU$363k

100%

On an industry level, around 59% of total compensation represents salary and 41% is other remuneration. According to our research, New World Resources has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
ceo-compensation

A Look at New World Resources Limited's Growth Numbers

Over the past three years, New World Resources Limited has seen its earnings per share (EPS) grow by 49% per year. Its revenue is down 20% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has New World Resources Limited Been A Good Investment?

Most shareholders would probably be pleased with New World Resources Limited for providing a total return of 175% over three years. 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.

To Conclude...

Seeing that company performance has been quite good recently, some shareholders may feel that CEO compensation may not be the biggest focus in the upcoming AGM. Seeing that earnings growth and share price performance seems to be on the right path, the more pressing focus for shareholders at the AGM may be how the board and management plans to turn the company into a sustainably profitable one.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 4 warning signs for New World Resources you should be aware of, and 2 of them don't sit too well with us.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.