The share price of Base Resources Limited (ASX:BSE) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. Some of these issues will occupy shareholders' minds as the AGM rolls around on 26 November 2021. It would also be an opportunity for them to influence management through exercising their voting power on company resolutions, including CEO and executive remuneration, which could impact on firm performance in the future. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

View our latest analysis for Base Resources

Comparing Base Resources Limited's CEO Compensation With the industry

At the time of writing, our data shows that Base Resources Limited has a market capitalization of AU$356m, and reported total annual CEO compensation of US$1.0m for the year to June 2021. That's a notable increase of 21% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$451k.

For comparison, other companies in the same industry with market capitalizations ranging between AU$138m and AU$551m had a median total CEO compensation of US$441k. This suggests that Tim Carstens is paid more than the median for the industry. Furthermore, Tim Carstens directly owns AU$2.6m worth of shares in the company, implying that they are deeply invested in the company's success.

Component 2021 2020 Proportion (2021) Salary US$451k US$405k 43% Other US$598k US$464k 57% Total Compensation US$1.0m US$869k 100%

On an industry level, roughly 59% of total compensation represents salary and 41% is other remuneration. Base Resources sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

 ceo-compensation

Base Resources Limited's Growth

Over the last three years, Base Resources Limited has shrunk its earnings per share by 36% per year. It saw its revenue drop 4.7% over the last year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Base Resources Limited Been A Good Investment?

Most shareholders would probably be pleased with Base Resources Limited for providing a total return of 68% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

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 pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which is concerning) in Base Resources we think you should know about.

Arguably, business quality is much more important than CEO compensation levels. So check out this freelist of interesting companies that have HIGH return on equity 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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