Is Rumble Resources Limited’s (ASX:RTR) CEO Paid Enough Relative To Peers?

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Is RTR’s CEO overpaid relative to the market?

Even though no standard benchmark exists, since remuneration should account for specific factors of the company and market, we can evaluate a high-level yardstick to see if RTR deviates substantially from its peers. This exercise helps investors ask the right question about Sikora’s incentive alignment. Typically, an Australian small-cap has a value of $140M, creates earnings of $10M, and remunerates its CEO circa $500,000 per year. Usually I’d use market cap and profit as factors determining performance, however, RTR’s negative earnings lower the usefulness of my formula. Looking at the range of compensation for small-cap executives, it seems like Sikora is paid aptly compared to those in similar-sized companies. Putting everything together, although RTR is unprofitable, it seems like the CEO’s pay is reflective of the appropriate level.

Next Steps:

In the upcoming year’s AGM, shareholders should think about whether another increase in CEO pay is justified, should the board propose an executive pay raise. Will this raise take Sikora’s pay beyond the bound of reasonableness, or will it help in retaining the talented executive? Being proactive in governance decisions is a key part to investing, and collectively, investors can make a big difference. If you have not done so already, I urge you to complete your research by taking a look at the following:

1. Governance: To find out more about RTR’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 RTR? 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.