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Key Things To Understand About Alkane Resources' (ASX:ALK) CEO Pay Cheque

Nic Earner became the CEO of Alkane Resources Limited (ASX:ALK) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Alkane Resources

How Does Total Compensation For Nic Earner Compare With Other Companies In The Industry?

Our data indicates that Alkane Resources Limited has a market capitalization of AU$741m, and total annual CEO compensation was reported as AU$1.3m for the year to June 2020. Notably, that's an increase of 22% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$484k.

For comparison, other companies in the same industry with market capitalizations ranging between AU$280m and AU$1.1b had a median total CEO compensation of AU$981k. Hence, we can conclude that Nic Earner is remunerated higher than the industry median. Moreover, Nic Earner also holds AU$4.7m worth of Alkane Resources stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component

2020

2019

Proportion (2020)

Salary

AU$484k

AU$467k

38%

Other

AU$800k

AU$582k

62%

Total Compensation

AU$1.3m

AU$1.0m

100%

Talking in terms of the industry, salary represented approximately 70% of total compensation out of all the companies we analyzed, while other remuneration made up 30% of the pie. It's interesting to note that Alkane Resources allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

A Look at Alkane Resources Limited's Growth Numbers

Over the past three years, Alkane Resources Limited has seen its earnings per share (EPS) grow by 51% per year. Its revenue is down 22% over the previous year.

Shareholders would be glad to know that the company has improved itself over the last few years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Alkane Resources Limited Been A Good Investment?

We think that the total shareholder return of 419%, over three years, would leave most Alkane Resources Limited shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

As we noted earlier, Alkane Resources pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, Alkane Resources has produced strong EPS growth and shareholder returns over the last three years. Considering such exceptional results for the company, we'd venture to say CEO compensation is fair. Given the strong history of shareholder returns, the shareholders are probably very happy with Nic's performance.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 2 warning signs for Alkane Resources (1 is significant!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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. 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.

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