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Is Contact Energy Limited's (NZSE:CEN) CEO Pay Justified?

Simply Wall St

In 2011 Dennis Barnes was appointed CEO of Contact Energy Limited (NZSE:CEN). First, this article will compare CEO compensation with compensation at similar sized companies. 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. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Contact Energy

How Does Dennis Barnes's Compensation Compare With Similar Sized Companies?

Our data indicates that Contact Energy Limited is worth NZ$5.3b, and total annual CEO compensation was reported as NZ$1.8m for the year to June 2019. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at NZ$977k. When we examined a selection of companies with market caps ranging from NZ$3.0b to NZ$9.7b, we found the median CEO total compensation was NZ$2.2m.

That means Dennis Barnes receives fairly typical remuneration for the CEO of a company that size. Although this fact alone doesn't tell us a great deal, it becomes more relevant when considered against the business performance.

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

NZSE:CEN CEO Compensation, January 16th 2020

Is Contact Energy Limited Growing?

Over the last three years Contact Energy Limited has grown its earnings per share (EPS) by an average of 39% per year (using a line of best fit). In the last year, its revenue is up 14%.

This demonstrates that the company has been improving recently. A good result. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. It could be important to check this free visual depiction of what analysts expect for the future.

Has Contact Energy Limited Been A Good Investment?

Boasting a total shareholder return of 82% over three years, Contact Energy Limited has done well by shareholders. 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...

Remuneration for Dennis Barnes is close enough to the median pay for a CEO of a similar sized company .

The company is growing earnings per share and total shareholder returns have been pleasing. So one could argue the CEO compensation is quite modest, if you consider company performance! Whatever your view on compensation, you might want to check if insiders are buying or selling Contact Energy shares (free trial).

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.