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The Compensation For Lynas Rare Earths Limited's (ASX:LYC) CEO Looks Deserved And Here's Why

The performance at Lynas Rare Earths Limited (ASX:LYC) has been quite strong recently and CEO Amanda Lacaze has played a role in it. Coming up to the next AGM on 28 November 2022, shareholders would be keeping this in mind. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. We think the CEO has done a pretty decent job and we discuss why the CEO compensation is appropriate.

See our latest analysis for Lynas Rare Earths

Comparing Lynas Rare Earths Limited's CEO Compensation With The Industry

According to our data, Lynas Rare Earths Limited has a market capitalization of AU$7.6b, and paid its CEO total annual compensation worth AU$3.2m over the year to June 2022. That's a notable increase of 37% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$1.3m.

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On examining similar-sized companies in the industry with market capitalizations between AU$6.0b and AU$18b, we discovered that the median CEO total compensation of that group was AU$4.0m. This suggests that Lynas Rare Earths remunerates its CEO largely in line with the industry average. What's more, Amanda Lacaze holds AU$23m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2022

2021

Proportion (2022)

Salary

AU$1.3m

AU$1.3m

42%

Other

AU$1.8m

AU$1.1m

58%

Total Compensation

AU$3.2m

AU$2.3m

100%

Speaking on an industry level, nearly 60% of total compensation represents salary, while the remainder of 40% is other remuneration. It's interesting to note that Lynas Rare Earths allocates a smaller portion of compensation to salary in comparison to the broader 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 Lynas Rare Earths Limited's Growth Numbers

Lynas Rare Earths Limited has seen its earnings per share (EPS) increase by 68% a year over the past three years. In the last year, its revenue is up 88%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Lynas Rare Earths Limited Been A Good Investment?

Boasting a total shareholder return of 285% over three years, Lynas Rare Earths Limited has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

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 identified 1 warning sign for Lynas Rare Earths that investors should be aware of in a dynamic business environment.

Important note: Lynas Rare Earths 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.

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

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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