Shareholders of PNX Metals Limited (ASX:PNX) will have been dismayed by the negative share price return over the last three years. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. The AGM coming up on the 27 October 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.
Comparing PNX Metals Limited's CEO Compensation With the industry
According to our data, PNX Metals Limited has a market capitalization of AU$26m, and paid its CEO total annual compensation worth AU$392k over the year to June 2021. We note that's an increase of 11% above last year. Notably, the salary which is AU$276.1k, represents most of the total compensation being paid.
On comparing similar-sized companies in the industry with market capitalizations below AU$268m, we found that the median total CEO compensation was AU$356k. From this we gather that James Fox is paid around the median for CEOs in the industry. Moreover, James Fox also holds AU$77k worth of PNX Metals stock directly under their own name.
On an industry level, around 63% of total compensation represents salary and 37% is other remuneration. It's interesting to note that PNX Metals pays out a greater portion of remuneration through salary, compared to the industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
PNX Metals Limited's Growth
PNX Metals Limited has seen its earnings per share (EPS) increase by 27% a year over the past three years. It achieved revenue growth of 61% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. 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 PNX Metals Limited Been A Good Investment?
Since shareholders would have lost about 22% over three years, some PNX Metals Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
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. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 5 warning signs for PNX Metals you should be aware of, and 2 of them can't be ignored.
Important note: PNX Metals 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.
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