In 2011 Geoff Hiller was appointed CEO of Malachite Resources Limited (ASX:MAR). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. 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.
How Does Geoff Hiller's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Malachite Resources Limited has a market cap of AU$1.4m, and reported total annual CEO compensation of AU$189k for the year to June 2019. It is worth noting that the CEO compensation consists almost entirely of the salary, worth AU$189k. We looked at a group of companies with market capitalizations under AU$326m, and the median CEO total compensation was AU$400k.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Malachite Resources stands. On a sector level, around 69% of total compensation represents salary and 31% is other remuneration. It's interesting to note that Malachite Resources pays out a greater portion of remuneration through salary, in comparison to the wider industry.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it's important we delve into the performance of the actual business. The graphic below shows how CEO compensation at Malachite Resources has changed from year to year.
Is Malachite Resources Limited Growing?
Malachite Resources Limited has reduced its earnings per share by an average of 42% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is down 97%.
Unfortunately, earnings per share have trended lower over the last three years. This is compounded by the fact revenue is actually down on last 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 you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Malachite Resources Limited Been A Good Investment?
With a three year total loss of 75%, Malachite Resources Limited would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.
It looks like Malachite Resources Limited pays its CEO less than similar sized companies.
The compensation paid to Geoff Hiller is lower than is usual at similar sized companies, but the eps growth is lacking, just like the returns (over three years). We would not call the pay too generous, but nor would we claim the CEO is underpaid, given lacklustre business performance. CEO compensation is an important area to keep your eyes on, but we've also identified 6 warning signs for Malachite Resources (4 don't sit too well with us!) that you should be aware of before investing here.
If you want to buy a stock that is better than Malachite Resources, this free list of high return, low debt companies is a great place to look.
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