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Why Impact Minerals Limited's (ASX:IPT) CEO Pay Matters To You

Simply Wall St

Mike Jones is the CEO of Impact Minerals Limited (ASX:IPT). 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 we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Impact Minerals

How Does Mike Jones's Compensation Compare With Similar Sized Companies?

According to our data, Impact Minerals Limited has a market capitalization of AU$15m, and paid its CEO total annual compensation worth AU$327k over the year to June 2019. That's just a smallish increase of 6.7% on last year. We think total compensation is more important but we note that the CEO salary is lower, at AU$262k. We took a group of companies with market capitalizations below AU$295m, and calculated the median CEO total compensation to be AU$370k.

That means Mike Jones receives fairly typical remuneration for the CEO of a company that size. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.

You can see, below, how CEO compensation at Impact Minerals has changed over time.

ASX:IPT CEO Compensation, September 25th 2019

Is Impact Minerals Limited Growing?

On average over the last three years, Impact Minerals Limited has shrunk earnings per share by 43% each year (measured with a line of best fit). Its revenue is down 37% over last year.

Sadly for shareholders, earnings per share are actually down, over three years. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Impact Minerals Limited Been A Good Investment?

With a three year total loss of 62%, Impact Minerals Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Mike Jones is paid around what is normal the leaders of comparable size companies.

Returns have been disappointing and the company is not growing its earnings per share. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves. Whatever your view on compensation, you might want to check if insiders are buying or selling Impact Minerals shares (free trial).

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.