In the past three years, the share price of Block Energy Plc (LON:BLOE) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 01 September 2021. They could also influence management through voting on resolutions such as executive remuneration. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
Comparing Block Energy Plc's CEO Compensation With the industry
According to our data, Block Energy Plc has a market capitalization of UK£15m, and paid its CEO total annual compensation worth US$442k over the year to December 2020. We note that's an increase of 29% above last year. Notably, the salary which is US$224.6k, represents a considerable chunk of the total compensation being paid.
For comparison, other companies in the industry with market capitalizations below UK£146m, reported a median total CEO compensation of US$384k. So it looks like Block Energy compensates Paul Haywood in line with the median for the industry. Furthermore, Paul Haywood directly owns UK£339k worth of shares in the company.
On an industry level, roughly 74% of total compensation represents salary and 26% is other remuneration. In Block Energy's case, non-salary compensation represents a greater slice of total remuneration, 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.
Block Energy Plc's Growth
Block Energy Plc has seen its earnings per share (EPS) increase by 13% a year over the past three years. In the last year, its revenue is up 495%.
Shareholders would be glad to know that the company has improved itself over the last few years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Block Energy Plc Been A Good Investment?
Since shareholders would have lost about 20% over three years, some Block Energy Plc investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 5 warning signs for Block Energy (of which 3 are a bit concerning!) that you should know about in order to have a holistic understanding of the stock.
Important note: Block Energy is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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.
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