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Kenmare Resources plc (LON:KMR) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 13 May 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.
How Does Total Compensation For Michael Carvill Compare With Other Companies In The Industry?
At the time of writing, our data shows that Kenmare Resources plc has a market capitalization of UK£494m, and reported total annual CEO compensation of US$1.1m for the year to December 2020. Notably, that's a decrease of 26% over the year before. In particular, the salary of US$619.0k, makes up a fairly large portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations ranging from UK£288m to UK£1.2b, the reported median CEO total compensation was US$887k. This suggests that Kenmare Resources remunerates its CEO largely in line with the industry average. Moreover, Michael Carvill also holds UK£1.4m worth of Kenmare Resources stock directly under their own name.
On an industry level, roughly 65% of total compensation represents salary and 35% is other remuneration. Kenmare Resources pays a modest slice of remuneration through salary, as compared to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Kenmare Resources plc's Growth
Kenmare Resources plc has reduced its earnings per share by 4.8% a year over the last three years. It saw its revenue drop 10% over the last year.
Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Kenmare Resources plc Been A Good Investment?
We think that the total shareholder return of 92%, over three years, would leave most Kenmare Resources plc shareholders smiling. 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.
While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.
CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for Kenmare Resources that investors should think about before committing capital to this stock.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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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