Rakesh Gupta became the CEO of Legacy Iron Ore Limited (ASX:LCY) in 2015, 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 Legacy Iron Ore pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Legacy Iron Ore

How Does Total Compensation For Rakesh Gupta Compare With Other Companies In The Industry?

Our data indicates that Legacy Iron Ore Limited has a market capitalization of AU$50m, and total annual CEO compensation was reported as AU$270k for the year to March 2020. We note that's an increase of 19% above last year. We note that the salary portion, which stands at AU$225.1k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below AU$284m, we found that the median total CEO compensation was AU$313k. From this we gather that Rakesh Gupta is paid around the median for CEOs in the industry.

On an industry level, roughly 70% of total compensation represents salary and 30% is other remuneration. Legacy Iron Ore is paying a higher share of its remuneration through a salary in comparison to the overall industry. 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.

Legacy Iron Ore Limited's Growth

Over the past three years, Legacy Iron Ore Limited has seen its earnings per share (EPS) grow by 18% per year. It achieved revenue growth of 48% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Legacy Iron Ore Limited Been A Good Investment?

Most shareholders would probably be pleased with Legacy Iron Ore Limited for providing a total return of 212% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary…

As previously discussed, Rakesh is compensated close to the median for companies of its size, and which belong to the same industry. The company is growing EPS and total shareholder returns have been pleasing. So one could argue that CEO compensation is quite modest, if you consider company performance! Stockholders might even be okay with a bump in pay, seeing as how investor returns have been so strong.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 4 warning signs (and 2 which are significant) in Legacy Iron Ore we think you should know about.

Switching gears from Legacy Iron Ore, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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