Thanks to the combined effects of trade wars and the advent of A.I., market interest in rare earth mineral and mining companies has hit a crescendo over the last two years. From AI resource demand, tariff effects on supply chains, to government investments, the attention given to these companies has been warranted.
The increased demand, investment, and attention for the rare assets of these companies has ignited the demand for qualified key leadership which has had significant knock-on effects on compensation levels seen in the market for such talent. Zayla, a Gallagher Company, a leading rare earth and mining compensation consulting firm, recently completed a six-year analysis of CEO pay trends from 30 publicly listed companies across US and Canadian exchanges. From this analysis, Zayla noted three major observations.
Observation 1: CEO Compensation has increased 66% over three years
Zayla analyzed average rare earth CEO compensation over two successive 3-year periods, using data from the 2020-2022 and 2023-2025 proxy seasons. Note that 3-year periods were used to mitigate some of the volatility in data from year to year.
When comparing findings from each period, Zayla noted CEO total direct compensation increased on average 66%. That equates to an annual increase of 18%, significantly higher than the Russell 3,000 annual increase of 9.7%. This significant increase in compensation is reflective of the demand for talent in the rare earth industry, coupled with a tightened labor market for senior leadership capable talent across the US and Canada. We note the increase in compensation is not just labor market driven, as increases in valuations and improving shareholder returns have driven boards to reward leadership for such outcomes. If one can see the forest from the trees with these confluent influences, it’s easy to understand why the significant uptick in executive compensation.
Observation 2: CEO Compensation has been volatile
The average annual volatility, calculated as the annual percentage iincrease or decrease, in CEO compensation for these 30 rare earth companies for the prior 6 years was 70%. Additionally, the spread of year of year change in compensation ranged as high as 133% positive to 14% negative.
We can all agree the macro stock market has been anything but “mainstream” the past 6 years. Layer on the financial volatility of rare earth companies and more recent increased demand and investment in the sector and it’s not a surprise to see such wide ranging changes to executive compensation.
Observation 3: 57% CEO turnover in 6 years
Executive turnover has added to the significant increase and volatility of CEO compensation for rare earth companies over the past 6 years. Across the dataset of 30 companies Zayla analyzed, 50% had a change in CEO during one of the 3 year blocks. This level of succession at the CEO position aligns with a broader changing of the guard Zayla is observing across the executive talent market, as baby boomer aged executives retire and get replaced by the next generation.
In what is looking to be a perfect storm, rare earth companies are attracting new investors, new money, and are actively seeking high growth executive teams for the future. As rare earth companies look for strong executive leadership to grow into the next phase, they will bring about further increases to executive compensation.
Zayla, a Gallagher Company, is a leading compensation advisory firm to the rare earth and mining industry. For any additional questions on this analysis, or compensation questions generally, please contact the team.