Shareholders Will Probably Not Have Any Issues With Prospech Limited's (ASX:PRS) CEO Compensation

editorial-team@simplywallst.com (Simply Wall St)

Tue, May 14, 2024, 3:06 PM 3 min read

Shareholders may be wondering what CEO Jason Beckton plans to do to improve the less than great performance at Prospech Limited (ASX:PRS) recently. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 21st of May. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. In our opinion, CEO compensation does not look excessive and we discuss why.

View our latest analysis for Prospech

Comparing Prospech Limited's CEO Compensation With The Industry

According to our data, Prospech Limited has a market capitalization of AU$12m, and paid its CEO total annual compensation worth AU$220k over the year to December 2023. We note that's a decrease of 8.3% compared to last year. Notably, the salary of AU$220k is the entirety of the CEO compensation.

On comparing similar-sized companies in the Australian Metals and Mining industry with market capitalizations below AU$303m, we found that the median total CEO compensation was AU$385k. In other words, Prospech pays its CEO lower than the industry median. What's more, Jason Beckton holds AU$320k worth of shares in the company in their own name.

Component	2023	2022	Proportion (2023)
Salary	AU$220k	AU$240k	100%
Other	-	-	-
Total Compensation	AU$220k	AU$240k	100%

On an industry level, around 64% of total compensation represents salary and 36% is other remuneration. On a company level, Prospech prefers to reward its CEO through a salary, opting not to pay Jason Beckton through non-salary benefits. 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.

ceo-compensation — ASX:PRS CEO Compensation May 14th 2024

Prospech Limited's Growth

Prospech Limited has seen its earnings per share (EPS) increase by 21% a year over the past three years. In the last year, the company lost virtually all of its revenue.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Prospech Limited Been A Good Investment?

Few Prospech Limited shareholders would feel satisfied with the return of -66% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Prospech rewards its CEO solely through a salary, ignoring non-salary benefits completely. The fact that shareholders have earned a negative share price return is certainly disconcerting. The share price trend has diverged with the robust growth in EPS however, suggesting there may be other factors that could be driving the price performance. There needs to be more focus by management and the board to examine why the share price has diverged from fundamentals. In the upcoming AGM, shareholders will get the opportunity to discuss these concerns with the board and assess if the board's plan is likely to improve company performance.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 5 warning signs for Prospech (4 are a bit unpleasant!) that you should be aware of before investing here.

Switching gears from Prospech, 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.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.