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What Can We Make Of ADX Energy's (ASX:ADX) CEO Compensation?

Simply Wall St
·3 mins read

This article will reflect on the compensation paid to Paul Fink who has served as CEO of ADX Energy Ltd (ASX:ADX) since 2015. This analysis will also assess whether ADX Energy pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for ADX Energy

How Does Total Compensation For Paul Fink Compare With Other Companies In The Industry?

At the time of writing, our data shows that ADX Energy Ltd has a market capitalization of AU$8.6m, and reported total annual CEO compensation of AU$376k for the year to December 2019. Notably, that's an increase of 25% over the year before. In particular, the salary of AU$246.6k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under AU$282m, the reported median total CEO compensation was AU$358k. From this we gather that Paul Fink is paid around the median for CEOs in the industry. Moreover, Paul Fink also holds AU$346k worth of ADX Energy stock directly under their own name.

Component

2019

2018

Proportion (2019)

Salary

AU$247k

AU$259k

66%

Other

AU$129k

AU$42k

34%

Total Compensation

AU$376k

AU$301k

100%

Talking in terms of the industry, salary represented approximately 76% of total compensation out of all the companies we analyzed, while other remuneration made up 24% of the pie. It's interesting to note that ADX Energy allocates a smaller portion of compensation to salary in comparison to the broader 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.

ceo-compensation
ceo-compensation

ADX Energy Ltd's Growth

ADX Energy Ltd's earnings per share (EPS) grew 30% per year over the last three years. Its revenue is up 830% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. 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 ADX Energy Ltd Been A Good Investment?

Since shareholders would have lost about 62% over three years, some ADX Energy Ltd investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we touched on above, ADX Energy Ltd is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. At the same time, the company has logged negative shareholder returns over the last three years. But on the bright side, EPS growth is positive over the same period. Overall, we wouldn't say Paul is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 6 warning signs for ADX Energy (of which 3 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

This article by Simply Wall St is general in nature. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.