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This article will reflect on the compensation paid to Murray Hill who has served as CEO of Marenica Energy Limited (ASX:MEY) since 2012. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Marenica Energy Limited's CEO Compensation With the industry
According to our data, Marenica Energy Limited has a market capitalization of AU$14m, and paid its CEO total annual compensation worth AU$365k over the year to June 2020. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is AU$260.0k, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations under AU$282m, the reported median total CEO compensation was AU$358k. This suggests that Marenica Energy remunerates its CEO largely in line with the industry average. Furthermore, Murray Hill directly owns AU$392k worth of shares in the company.
Speaking on an industry level, nearly 76% of total compensation represents salary, while the remainder of 24% is other remuneration. Although there is a difference in how total compensation is set, Marenica Energy more or less reflects the market in terms of setting the salary. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Marenica Energy Limited's Growth Numbers
Over the past three years, Marenica Energy Limited has seen its earnings per share (EPS) grow by 42% per year. Its revenue is up 20% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Marenica Energy Limited Been A Good Investment?
Since shareholders would have lost about 1.0% over three years, some Marenica Energy Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As previously discussed, Murray is compensated close to the median for companies of its size, and which belong to the same industry. Meanwhile, shareholder returns paint a sorry picture for the company, finishing in the red over the last three years. But on the bright side, EPS growth is positive over the same period. It's tough for us to say CEO compensation is too generous when EPS growth is positive, but negative investor returns will irk shareholders and reduce any chances of a raise.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 6 warning signs for Marenica Energy (4 can't be ignored!) that you should be aware of before investing here.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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.
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