How Is Galilee Energy's (ASX:GLL) CEO Compensated?
Peter Lansom became the CEO of Galilee Energy Limited (ASX:GLL) in 2013, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
View our latest analysis for Galilee Energy
How Does Total Compensation For Peter Lansom Compare With Other Companies In The Industry?
According to our data, Galilee Energy Limited has a market capitalization of AU$183m, and paid its CEO total annual compensation worth AU$823k over the year to June 2020. We note that's a decrease of 21% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at AU$389k.
On comparing similar-sized companies in the industry with market capitalizations below AU$271m, we found that the median total CEO compensation was AU$352k. This suggests that Peter Lansom is paid more than the median for the industry. Moreover, Peter Lansom also holds AU$7.5m worth of Galilee Energy stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2020 | 2019 | Proportion (2020) |
Salary | AU$389k | AU$387k | 47% |
Other | AU$434k | AU$654k | 53% |
Total Compensation | AU$823k | AU$1.0m | 100% |
On an industry level, roughly 76% of total compensation represents salary and 24% is other remuneration. It's interesting to note that Galilee Energy allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Galilee Energy Limited's Growth
Galilee Energy Limited has reduced its earnings per share by 36% a year over the last three years. Its revenue is up 11% over the last year.
The decline in EPS is a bit concerning. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Galilee Energy Limited Been A Good Investment?
Most shareholders would probably be pleased with Galilee Energy Limited for providing a total return of 288% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
To Conclude...
As we touched on above, Galilee Energy Limited is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. We feel that EPS have been a bit disappointing, but it's nice to see positive shareholder returns over the last three years. Considering positive investor returns, it would be bold of us to criticize CEO compensation, but shareholders might want to see healthier EPS growth before a raise is given out.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 5 warning signs for Galilee Energy (2 are a bit concerning!) that you should be aware of before investing here.
Important note: Galilee 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. 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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
