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Is Buru Energy Limited's (ASX:BRU) CEO Salary Justified?

Simply Wall St

Eric Streitberg is the CEO of Buru Energy Limited (ASX:BRU). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Buru Energy

How Does Eric Streitberg's Compensation Compare With Similar Sized Companies?

According to our data, Buru Energy Limited has a market capitalization of AU$114m, and paid its CEO total annual compensation worth AU$719k over the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$586k. We took a group of companies with market capitalizations below AU$297m, and calculated the median CEO total compensation to be AU$376k.

Thus we can conclude that Eric Streitberg receives more in total compensation than the median of a group of companies in the same market, and of similar size to Buru Energy Limited. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

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

ASX:BRU CEO Compensation, October 1st 2019

Is Buru Energy Limited Growing?

Over the last three years Buru Energy Limited has grown its earnings per share (EPS) by an average of 98% per year (using a line of best fit). It achieved revenue growth of 3.4% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. Shareholders might be interested in this free visualization of analyst forecasts.

Has Buru Energy Limited Been A Good Investment?

Buru Energy Limited has served shareholders reasonably well, with a total return of 31% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

We compared the total CEO remuneration paid by Buru Energy Limited, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

However we must not forget that the EPS growth has been very strong over three years. We also note that, over the same time frame, shareholder returns haven't been bad. While it may be worth researching further, we don't see a problem with the CEO pay, given the good EPS growth. So you may want to check if insiders are buying Buru Energy shares with their own money (free access).

If you want to buy a stock that is better than Buru Energy, this free list of high return, low debt companies is a great place to look.

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.