This article will reflect on the compensation paid to Warwick Davies who has served as CEO of Resource Mining Corporation Limited (ASX:RMI) since 2010. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Resource Mining

How Does Total Compensation For Warwick Davies Compare With Other Companies In The Industry?

According to our data, Resource Mining Corporation Limited has a market capitalization of AU$4.1m, and paid its CEO total annual compensation worth AU$89k over the year to June 2020. We note that's an increase of 8.7% above last year. Notably, the salary of AU$89k is the entirety of the CEO compensation.

On comparing similar-sized companies in the industry with market capitalizations below AU$278m, we found that the median total CEO compensation was AU$309k. This suggests that Warwick Davies is paid below the industry median.

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. Speaking on a company level, Resource Mining prefers to tread along a traditional path, disbursing all compensation through a salary. 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.

A Look at Resource Mining Corporation Limited's Growth Numbers

Resource Mining Corporation Limited has seen its earnings per share (EPS) increase by 13% a year over the past three years. Its revenue is up 3.0% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Resource Mining Corporation Limited Been A Good Investment?

We think that the total shareholder return of 100%, over three years, would leave most Resource Mining Corporation Limited shareholders smiling. 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.

In Summary…

Resource Mining pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we noted earlier, Resource Mining pays its CEO lower than the norm for similar-sized companies belonging to the same industry. Considering robust EPS growth, we believe Warwick to be modestly paid. Plus, we can't ignore the impressive shareholder returns, and won't be surprised if some shareholders were to reward such excellent all-around performance with a raise.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 4 warning signs for Resource Mining (of which 3 don't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

Important note: Resource Mining 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. 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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