David Leavy is the CEO of Pure Alumina Limited (ASX:PUA). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for Pure Alumina
How Does David Leavy's Compensation Compare With Similar Sized Companies?
According to our data, Pure Alumina Limited has a market capitalization of AU$3.8m, and paid its CEO total annual compensation worth AU$287k over the year to June 2019. While we always look at total compensation first, we note that the salary component is less, at AU$204k. We examined a group of similar sized companies, with market capitalizations of below AU$312m. The median CEO total compensation in that group is AU$389k.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Pure Alumina. Talking in terms of the sector, salary represented approximately 69% of total compensation out of all the companies we analysed, while other remuneration made up 31% of the pie. Pure Alumina does not set aside a larger portion of remuneration in the form of salary, maintaining the same rate as the wider market.
So David Leavy is paid around the average of the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context. You can see, below, how CEO compensation at Pure Alumina has changed over time.
Is Pure Alumina Limited Growing?
Over the last three years Pure Alumina Limited has shrunk its earnings per share by an average of 22% per year (measured with a line of best fit). Its revenue is down 80% over last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Pure Alumina Limited Been A Good Investment?
Since shareholders would have lost about 68% over three years, some Pure Alumina Limited shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
In Summary...
David Leavy is paid around the same as most CEOs of similar size companies.
The company isn't growing EPS, and shareholder returns have been disappointing. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves. CEO compensation is an important area to keep your eyes on, but we've also identified 6 warning signs for Pure Alumina (4 are a bit unpleasant!) that you should be aware of before investing here.
If you want to buy a stock that is better than Pure Alumina, this free list of high return, low debt companies is a great place to look.
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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. Thank you for reading.
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