Peter Schwann became the CEO of Aruma Resources Limited (ASX:AAJ) in 2010. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Peter Schwann's Compensation Compare With Similar Sized Companies?
Our data indicates that Aruma Resources Limited is worth AU$1.4m, and total annual CEO compensation was reported as AU$219k for the year to June 2019. While we always look at total compensation first, we note that the salary component is less, at AU$200k. We looked at a group of companies with market capitalizations under AU$334m, and the median CEO total compensation was AU$404k.
A first glance this seems like a real positive for shareholders, since Peter Schwann is paid less than the average total compensation paid by similar sized companies. While this is a good thing, you'll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at Aruma Resources has changed from year to year.
Is Aruma Resources Limited Growing?
Over the last three years Aruma Resources Limited has shrunk its earnings per share by an average of 4.2% per year (measured with a line of best fit). Its revenue is up 6.1% over last year.
Few shareholders would be pleased to read that earnings per share are lower over 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. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Aruma Resources Limited Been A Good Investment?
Given the total loss of 78% over three years, many shareholders in Aruma Resources Limited are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
It appears that Aruma Resources Limited remunerates its CEO below most similar sized companies.
Shareholders should note that compensation for Peter Schwann is under the median of a group of similar sized companies. But then, EPS growth is lacking and so are the returns to shareholders. While one could argue it is appropriate for the CEO to be paid less than other CEOs of similar sized companies, given company performance, we would not call the pay overly generous. Shifting gears from CEO pay for a second, we've spotted 6 warning signs for Aruma Resources you should be aware of, and 3 of them are significant.
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.
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