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Is Xstate Resources Limited (ASX:XST) Excessively Paying Its CEO?

Simply Wall St

In 2016 Cosimo Damiano was appointed CEO of Xstate Resources Limited (ASX:XST). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. 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.

Check out our latest analysis for Xstate Resources

How Does Cosimo Damiano's Compensation Compare With Similar Sized Companies?

According to our data, Xstate Resources Limited has a market capitalization of AU$3.4m, and paid its CEO total annual compensation worth AU$181k over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at AU$160k. We examined a group of similar sized companies, with market capitalizations of below AU$289m. The median CEO total compensation in that group is AU$378k.

A first glance this seems like a real positive for shareholders, since Cosimo Damiano 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 a visual representation of the CEO compensation at Xstate Resources, below.

ASX:XST CEO Compensation, November 4th 2019

Is Xstate Resources Limited Growing?

On average over the last three years, Xstate Resources Limited has grown earnings per share (EPS) by 45% each year (using a line of best fit). It saw its revenue drop 66% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. Although we don't have analyst forecasts you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Xstate Resources Limited Been A Good Investment?

Since shareholders would have lost about 75% over three years, some Xstate Resources Limited shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Xstate Resources Limited is currently paying its CEO below what is normal for companies of its size.

Many would consider this to indicate that the pay is modest since the business is growing. Few would deny that the total shareholder return over the last three years could have been a lot better. So while we would not say that Cosimo Damiano is generously paid, it would be good to see an improvement in business performance before too an increase in pay. In this case we may want to look deeper into the company. There are some real positives and we could see improved returns in the longer term. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Xstate Resources.

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.