Key Insights
The results atSilver Lake Resources Limited(ASX:SLR) have been quite disappointing recently and CEO Luke Tonkin bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 24th of November. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.
View our latest analysis for Silver Lake Resources
How Does Total Compensation For Luke Tonkin Compare With Other Companies In The Industry?
Our data indicates that Silver Lake Resources Limited has a market capitalization of AU$977m, and total annual CEO compensation was reported as AU$2.1m for the year to June 2023. That's just a smallish increase of 3.9% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$898k.
On examining similar-sized companies in theAustralian Metals and Mining industrywith market capitalizations between AU$615m and AU$2.5b, we discovered that the median CEO total compensation of that group was AU$1.5m. Accordingly, our analysis reveals that Silver Lake Resources Limited pays Luke Tonkin north of the industry median. Furthermore, Luke Tonkin directly owns AU$799k worth of shares in the company.
| Component | 2023 | 2022 | Proportion (2023) |
|---|
| 1 | Salary | AU$898k | AU$846k | 42% |
|---|
| 2 | Other | AU$1.2m | AU$1.2m | 58% |
|---|
| 3 | Total Compensation | AU$2.1m | AU$2.1m | 100% |
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On an industry level, around 61% of total compensation represents salary and 39% is other remuneration. It's interesting to note that Silver Lake 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.
ASX:SLR CEO Compensation November 17th 2023
Silver Lake Resources Limited's Growth
Silver Lake Resources Limited has reduced its earnings per share by 53% a year over the last three years. Its revenue is up 13% over the last year.
Overall this is not a very positive result for shareholders. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to checkthis free visual report onanalyst forecastsfor the company's future earnings..
Has Silver Lake Resources Limited Been A Good Investment?
With a total shareholder return of -44% over three years, Silver Lake Resources Limited shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified1 warning sign for Silver Lake Resourcesthat investors should be aware of in a dynamic business environment.
Arguably, business quality is much more important than CEO compensation levels. So check out thisfreelist of interesting companies that have HIGH return on equity and low debt.
