Mark Gray became the CEO of Allegiance Coal Limited (ASX:AHQ) in 2017, 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
View our latest analysis for Allegiance Coal
How Does Total Compensation For Mark Gray Compare With Other Companies In The Industry?
At the time of writing, our data shows that Allegiance Coal Limited has a market capitalization of AU$43m, and reported total annual CEO compensation of AU$501k for the year to June 2020. We note that's an increase of 25% above last year. We note that the salary portion, which stands at AU$302.0k constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations under AU$263m, the reported median total CEO compensation was AU$309k. Accordingly, our analysis reveals that Allegiance Coal Limited pays Mark Gray north of the industry median. Furthermore, Mark Gray directly owns AU$1.3m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$302k | AU$342k | 60% |
| Other | AU$199k | AU$59k | 40% |
| Total Compensation | AU$501k | AU$401k | 100% |
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. Allegiance Coal sets aside a smaller share of compensation for 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.
A Look at Allegiance Coal Limited's Growth Numbers
Over the last three years, Allegiance Coal Limited has shrunk its earnings per share by 50% per year. Its revenue is down 70% over the previous year.
The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Allegiance Coal Limited Been A Good Investment?
Most shareholders would probably be pleased with Allegiance Coal Limited for providing a total return of 34% over three years. 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.