The underwhelming share price performance of Ardea Resources Limited (ASX:ARL) in the past three years would have disappointed many shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. These are some of the concerns that shareholders may want to bring up at the next AGM held on 29 November 2021. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.
How Does Total Compensation For Andrew Penkethman Compare With Other Companies In The Industry?
At the time of writing, our data shows that Ardea Resources Limited has a market capitalization of AU$69m, and reported total annual CEO compensation of AU$441k for the year to June 2021. Notably, that's an increase of 16% over the year before. We note that the salary portion, which stands at AU$297.3k constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations under AU$276m, the reported median total CEO compensation was AU$352k. This suggests that Ardea Resources remunerates its CEO largely in line with the industry average.
Speaking on an industry level, nearly 59% of total compensation represents salary, while the remainder of 41% is other remuneration. It's interesting to note that Ardea Resources pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Ardea Resources Limited's Growth
Ardea Resources Limited's earnings per share (EPS) grew 31% per year over the last three years. In the last year, its revenue is up 76%.
This demonstrates that the company has been improving recently and is good news for the shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Ardea Resources Limited Been A Good Investment?
Given the total shareholder loss of 23% over three years, many shareholders in Ardea Resources Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.
The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 4 warning signs (and 1 which shouldn't be ignored) in Ardea Resources we think you should know about.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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.
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