Shareholders Will Probably Be Cautious Of Increasing Empire Resources Limited's (ASX:ERL) CEO Compensation At The Moment

Key Insights

• Empire Resources will host its Annual General Meeting on 30th of November

• Salary of AU$220.0k is part of CEO Sean Richardson's total remuneration

• Total compensation is 37% below industry average

• Over the past three years, Empire Resources' EPS fell by 54% and over the past three years, the total loss to shareholders 70%

The underwhelming performance at Empire Resources Limited (ASX:ERL) recently has probably not pleased shareholders. At the upcoming AGM on 30th of November, shareholders may have the opportunity to influence management to turn the performance around by voting on resolutions such as executive remuneration and other matters. We think most shareholders will probably pass the CEO compensation, based on what we gathered.

Check out our latest analysis for Empire Resources

How Does Total Compensation For Sean Richardson Compare With Other Companies In The Industry?

Our data indicates that Empire Resources Limited has a market capitalization of AU$4.5m, and total annual CEO compensation was reported as AU$243k for the year to June 2023. That is, the compensation was roughly the same as last year. In particular, the salary of AU$220.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Australian Metals and Mining industry with market capitalizations under AU$305m, the reported median total CEO compensation was AU$384k. Accordingly, Empire Resources pays its CEO under the industry median. Moreover, Sean Richardson also holds AU$92k worth of Empire Resources stock directly under their own name.

On an industry level, around 61% of total compensation represents salary and 39% is other remuneration. Empire Resources pays out 90% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Empire Resources Limited's Growth

Over the last three years, Empire Resources Limited has shrunk its earnings per share by 54% per year. In the last year, its revenue has collapsed effectively to zero.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Empire Resources Limited Been A Good Investment?

Few Empire Resources Limited shareholders would feel satisfied with the return of -70% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 6 warning signs for Empire Resources (of which 5 are significant!) that you should know about in order to have a holistic understanding of the stock.

Important note: Empire Resources is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.