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Keith Coughlan became the CEO of European Metals Holdings Limited (ASX:EMH) in 2013, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether European Metals Holdings pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing European Metals Holdings Limited's CEO Compensation With the industry
Our data indicates that European Metals Holdings Limited has a market capitalization of AU$68m, and total annual CEO compensation was reported as AU$294k for the year to June 2020. That is, the compensation was roughly the same as last year. Notably, the salary which is AU$240.0k, represents most of the total compensation being paid.
For comparison, other companies in the industry with market capitalizations below AU$279m, reported a median total CEO compensation of AU$303k. From this we gather that Keith Coughlan is paid around the median for CEOs in the industry. Furthermore, Keith Coughlan directly owns AU$353k worth of shares in the company.
On an industry level, around 69% of total compensation represents salary and 31% is other remuneration. European Metals Holdings pays out 82% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at European Metals Holdings Limited's Growth Numbers
European Metals Holdings Limited's earnings per share (EPS) grew 7.4% per year over the last three years. Its revenue is down 46% over the previous year.
We would prefer it if there was revenue growth, but it is good to see a modest EPS growth at least. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 European Metals Holdings Limited Been A Good Investment?
With a three year total loss of 56% for the shareholders, European Metals Holdings Limited would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we noted earlier, European Metals Holdings pays its CEO in line with similar-sized companies belonging to the same industry. This doesn't look good when you place it against the backdrop of negative shareholder returns and flat EPS growth. Although we wouldn't say CEO compensation is exceptionally high, it isn't very low either. Shareholders might want to see substantial improvements in returns before agreeing that Keith deserves a raise.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 5 warning signs for European Metals Holdings (of which 2 are significant!) that you should know about in order to have a holistic understanding of the stock.
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. 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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