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Is Renascor Resources Limited's (ASX:RNU) CEO Pay Justified?

Simply Wall St

David Christensen has been the CEO of Renascor Resources Limited (ASX:RNU) since 2010. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Renascor Resources

How Does David Christensen's Compensation Compare With Similar Sized Companies?

According to our data, Renascor Resources Limited has a market capitalization of AU$16m, and paid its CEO total annual compensation worth AU$481k over the year to June 2019. We think total compensation is more important but we note that the CEO salary is lower, at AU$274k. We examined a group of similar sized companies, with market capitalizations of below AU$306m. The median CEO total compensation in that group is AU$383k.

Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Renascor Resources stands. Talking in terms of the sector, salary represented approximately 71% of total compensation out of all the companies we analysed, while other remuneration made up 29% of the pie. Renascor Resources does not set aside a larger portion of remuneration in the form of salary, maintaining the same rate as the wider market.

So David Christensen receives a similar amount to the median CEO pay, amongst 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 Renascor Resources has changed over time.

ASX:RNU CEO Compensation May 27th 2020

Is Renascor Resources Limited Growing?

Renascor Resources Limited has seen earnings per share (EPS) move positively by an average of 31% a year, over the last three years (using a line of best fit). It saw its revenue drop 98% over the last year.

This demonstrates that the company has been improving recently. A good result. Revenue growth is a real positive for growth, but ultimately profits are more important. You might want to check this free visual report on analyst forecasts for future earnings.

Has Renascor Resources Limited Been A Good Investment?

Since shareholders would have lost about 37% over three years, some Renascor Resources Limited shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Remuneration for David Christensen is close enough to the median pay for a CEO of a similar sized company .

We like that the company is growing EPS, but we cannot say the same about the lacklustre shareholder returns (over the last three years). We'd be surprised if shareholders want to see a pay rise for the CEO, but we'd stop short of calling their pay too generous. Shifting gears from CEO pay for a second, we've spotted 4 warning signs for Renascor Resources you should be aware of, and 1 of them is potentially serious.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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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.