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Most Shareholders Will Probably Agree With Chalice Mining Limited's (ASX:CHN) CEO Compensation

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Shareholders may be wondering what CEO Alex Dorsch plans to do to improve the less than great performance at Chalice Mining Limited (ASX:CHN) recently. At the next AGM coming up on 24 November 2021, they can influence managerial decision making through voting on resolutions, including executive remuneration. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. We have prepared some analysis below to show that CEO compensation looks to be reasonable.

See our latest analysis for Chalice Mining

How Does Total Compensation For Alex Dorsch Compare With Other Companies In The Industry?

Our data indicates that Chalice Mining Limited has a market capitalization of AU$3.5b, and total annual CEO compensation was reported as AU$844k for the year to June 2021. We note that's an increase of 70% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$336k.

In comparison with other companies in the industry with market capitalizations ranging from AU$2.7b to AU$8.8b, the reported median CEO total compensation was AU$2.2m. That is to say, Alex Dorsch is paid under the industry median. What's more, Alex Dorsch holds AU$58m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2021

2020

Proportion (2021)

Salary

AU$336k

AU$299k

40%

Other

AU$508k

AU$198k

60%

Total Compensation

AU$844k

AU$497k

100%

Speaking on an industry level, nearly 59% of total compensation represents salary, while the remainder of 41% is other remuneration. Chalice Mining sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

A Look at Chalice Mining Limited's Growth Numbers

Chalice Mining Limited has reduced its earnings per share by 57% a year over the last three years. Its revenue is up 15% over the last year.

The decline in EPS is a bit concerning. 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. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Chalice Mining Limited Been A Good Investment?

Most shareholders would probably be pleased with Chalice Mining Limited for providing a total return of 8,760% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us wonder if these strong returns can continue. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 4 warning signs for Chalice Mining you should be aware of, and 1 of them is significant.

Important note: Chalice Mining 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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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