Does Core Exploration Limited’s (ASX:CXO) CEO Salary Compare Well With Others?

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Is CXO’s CEO overpaid relative to the market?

Though one size does not fit all, as compensation should account for specific factors of the company and market, we can fashion a high-level benchmark to see if CXO is an outlier. This outcome can help shareholders ask the right question about Biggins’s incentive alignment. Generally, an Australian small-cap has a value of $140M, creates earnings of $10M, and pays its CEO at roughly $500,000 annually. Usually I would look at market cap and earnings as a proxy for performance, however, CXO’s negative earnings lower the usefulness of my formula. Given the range of pay for small-cap executives, it seems like Biggins is paid aptly compared to those in similar-sized companies. On the whole, even though CXO is loss-making, it seems like the CEO’s pay is sound.

Next Steps:

CEO pay is one of those topics of high controversy. Nonetheless, it should be talked about with full transparency from the board to shareholders. Is Biggins remunerated appropriately based on other factors we have not covered today? Is this justified? As a shareholder, you should be aware of how those that represent you (i.e. the board of directors) make decisions on CEO pay and whether their incentives are aligned with yours. If you have not done so already, I highly recommend you to complete your research by taking a look at the following:

1. Governance: To find out more about CXO’s governance, look through our infographic report of the company’s board and management.
2. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
3. Other High-Growth Alternatives: Are there other high-growth stocks you could be holding instead of CXO? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned.