James Earle became the CEO of Nagambie Resources Limited (ASX:NAG) in 2016, 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 Nagambie Resources pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Nagambie Resources

Comparing Nagambie Resources Limited's CEO Compensation With the industry

According to our data, Nagambie Resources Limited has a market capitalization of AU$25m, and paid its CEO total annual compensation worth AU$276k over the year to June 2020. We note that's a decrease of 19% compared to last year. Notably, the salary which is AU$200.0k, represents most of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below AU$276m, we found that the median total CEO compensation was AU$311k. So it looks like Nagambie Resources compensates James Earle in line with the median for the industry.

Talking in terms of the industry, salary represented approximately 70% of total compensation out of all the companies we analyzed, while other remuneration made up 30% of the pie. Although there is a difference in how total compensation is set, Nagambie Resources more or less reflects the market in terms of setting the salary. If total compensation veers towards salary, it suggests that the variable portion – which is generally tied to performance, is lower.

Nagambie Resources Limited's Growth

Over the past three years, Nagambie Resources Limited has seen its earnings per share (EPS) grow by 26% per year. Its revenue is down 6.8% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. 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 Nagambie Resources Limited Been A Good Investment?

Since shareholders would have lost about 12% over three years, some Nagambie Resources Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary…

As we touched on above, Nagambie Resources Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. At the same time, the company has logged negative shareholder returns over the last three years. But EPS growth is moving in a favorable direction, certainly a positive sign. Overall, we wouldn't say James is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 5 warning signs for Nagambie Resources (2 make us uncomfortable!) that you should be aware of before investing here.

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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