Is Middle Island Resources Limited (ASX:MDI) Excessively Paying Its CEO?
Rick Yeates has been the CEO of Middle Island Resources Limited (ASX:MDI) since 2010. 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
View our latest analysis for Middle Island Resources
How Does Rick Yeates's Compensation Compare With Similar Sized Companies?
Our data indicates that Middle Island Resources Limited is worth AU$8.4m, and total annual CEO compensation is AU$197k. (This is based on the year to June 2018). We think total compensation is more important but we note that the CEO salary is lower, at AU$180k. We looked at a group of companies with market capitalizations under AU$296m, and the median CEO total compensation was AU$358k.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. 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 Middle Island Resources, below.
Is Middle Island Resources Limited Growing?
On average over the last three years, Middle Island Resources Limited has grown earnings per share (EPS) by 60% each year (using a line of best fit). It achieved revenue growth of 1292% over the last year.
This demonstrates that the company has been improving recently. A good result. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. 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 Middle Island Resources Limited Been A Good Investment?
Given the total loss of 88% over three years, many shareholders in Middle Island Resources Limited are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
In Summary...
Middle Island 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. Unfortunately, some shareholders may be disappointed with their returns, given the company's performance over the last three years. We're not critical of the remuneration Rick Yeates receives, but it would be good to see improved returns to shareholders before the remuneration grows too much.
When I see fairly low remuneration, combined with earnings per share growth, but without big share price gains, it makes me want to research the potential for future gains. Shareholders may want to check for free if Middle Island Resources insiders are buying or selling shares.
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.
