Peter Botten became the CEO of Oil Search Limited (ASX:OSH) in 1994. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Peter Botten’s Compensation Compare With Similar Sized Companies?
According to our data, Oil Search Limited has a market capitalization of AU$13b, and pays its CEO total annual compensation worth US$5.9m. (This figure is for the year to December 2018). That’s a modest increase of 1.2% on the prior year year. While we always look at total compensation first, we note that the salary component is less, at US$1.7m. We looked at a group of companies with market capitalizations from US$4.0b to US$12b, and the median CEO compensation was US$2.9m.
It would therefore appear that Oil Search Limited pays Peter Botten more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration 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 Oil Search has changed from year to year.
Is Oil Search Limited Growing?
Oil Search Limited has increased its earnings per share (EPS) by an average of 87% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 6.2%.
This shows that the company has improved itself over the last few years. Good news for shareholders. 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 Oil Search Limited Been A Good Investment?
Oil Search Limited has served shareholders reasonably well, with a total return of 17% over three years. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.
We compared the total CEO remuneration paid by Oil Search Limited, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
However, the earnings per share growth over three years is certainly impressive. We also think investors are doing ok, over the same time period. While it may be worth researching further, we don’t see a problem with the CEO pay, given the good EPS growth. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Oil Search.
If you want to buy a stock that is better than Oil Search, this free list of high return, low debt companies is a great place to look.
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