Should You Worry About Magnum Mining and Exploration Limited's (ASX:MGU) CEO Salary Level?
Grant Button has been the CEO of Magnum Mining and Exploration Limited (ASX:MGU) since 2007. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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. This method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for Magnum Mining and Exploration
How Does Grant Button's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Magnum Mining and Exploration Limited has a market cap of AU$15m, and reported total annual CEO compensation of AU$124k for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at AU$83k. We examined a group of similar sized companies, with market capitalizations of below AU$293m. The median CEO total compensation in that group is AU$378k.
A first glance this seems like a real positive for shareholders, since Grant Button 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.
You can see, below, how CEO compensation at Magnum Mining and Exploration has changed over time.
Is Magnum Mining and Exploration Limited Growing?
Magnum Mining and Exploration Limited has reduced its earnings per share by an average of 28% a year, over the last three years (measured with a line of best fit). It achieved revenue growth of 15% over the last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. 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 you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Magnum Mining and Exploration Limited Been A Good Investment?
With a total shareholder return of 23% over three years, Magnum Mining and Exploration Limited shareholders would, in general, be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
In Summary...
It appears that Magnum Mining and Exploration Limited remunerates its CEO below most similar sized companies.
Shareholders should note that compensation for Grant Button is under the median of a group of similar sized companies. But the company lacks earnings per share growth, and returns to shareholders are less than stellar. There is room for improved company performance, but we don't see the CEO pay as a big issue here. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Magnum Mining and Exploration (free visualization of insider trades).
Important note: Magnum Mining and Exploration may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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.
