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Is Brookside Energy Limited's (ASX:BRK) CEO Being Overpaid?

Simply Wall St

David Prentice has been the CEO of Brookside Energy Limited (ASX:BRK) since 2004. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Brookside Energy

How Does David Prentice's Compensation Compare With Similar Sized Companies?

Our data indicates that Brookside Energy Limited is worth AU$9.0m, and total annual CEO compensation was reported as AU$180k for the year to December 2018. Notably, the salary of AU$180k is the vast majority of the CEO compensation. We looked at a group of companies with market capitalizations under AU$292m, and the median CEO total compensation was AU$376k.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it's important we delve into the performance of the actual business.

The graphic below shows how CEO compensation at Brookside Energy has changed from year to year.

ASX:BRK CEO Compensation, October 22nd 2019

Is Brookside Energy Limited Growing?

Brookside Energy Limited has increased its earnings per share (EPS) by an average of 68% a year, over the last three years (using a line of best fit). It achieved revenue growth of 3947% over the last year.

This demonstrates that the company has been improving recently. A good result. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. Although we don't have analyst forecasts you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Brookside Energy Limited Been A Good Investment?

Given the total loss of 18% over three years, many shareholders in Brookside Energy Limited are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

Brookside Energy Limited is currently paying its CEO below what is normal for companies of its size.

Many would consider this to indicate that the pay is modest since the business is growing. Despite some positives, it is likely that shareholders wanted better returns, given the performance over the last three years. So while we don't think, David Prentice is paid too much, shareholders may hope that business performance translates to investment returns before pay rises are given out. This sort of circumstance certainly justifies further research, because the investment returns might still come in the future. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Brookside Energy (free visualization of insider trades).

Important note: Brookside Energy may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.