U.S. markets open in 5 hours 15 minutes

Is Byron Energy Limited (ASX:BYE) Excessively Paying Its CEO?

Simply Wall St

Maynard Smith became the CEO of Byron Energy Limited (ASX:BYE) in 2013. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Byron Energy

How Does Maynard Smith's Compensation Compare With Similar Sized Companies?

According to our data, Byron Energy Limited has a market capitalization of AU$268m, and paid its CEO total annual compensation worth US$877k over the year to June 2019. We think total compensation is more important but we note that the CEO salary is lower, at . Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$100m to US$400m. The median total CEO compensation was US$450k.

As you can see, Maynard Smith is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Byron Energy Limited is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at Byron Energy, below.

ASX:BYE CEO Compensation, February 24th 2020

Is Byron Energy Limited Growing?

Over the last three years Byron Energy Limited has grown its earnings per share (EPS) by an average of 121% per year (using a line of best fit). Its revenue is up 228% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Shareholders might be interested in this free visualization of analyst forecasts.

Has Byron Energy Limited Been A Good Investment?

Most shareholders would probably be pleased with Byron Energy Limited for providing a total return of 176% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

We examined the amount Byron Energy Limited pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. On top of that, in the same period, returns to shareholders have been great. As a result of this good performance, the CEO remuneration may well be quite reasonable. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Byron Energy.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

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.

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. Thank you for reading.