In 2015 John Hamilton was appointed CEO of Panoro Energy ASA (OB:PEN). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does John Hamilton's Compensation Compare With Similar Sized Companies?
According to our data, Panoro Energy ASA has a market capitalization of kr410m, and paid its CEO total annual compensation worth US$690k over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$375k. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$390k.
Now let's take a look at the pay mix on an industry and company level to gain a better understanding of where Panoro Energy stands. On a sector level, around 69% of total compensation represents salary and 31% is other remuneration. Panoro Energy is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation
It would therefore appear that Panoro Energy ASA pays John Hamilton 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 better assess whether the pay is overly generous by looking into the underlying business performance. The graphic below shows how CEO compensation at Panoro Energy has changed from year to year.
Is Panoro Energy ASA Growing?
Panoro Energy ASA has seen earnings per share (EPS) move positively by an average of 98% a year, over the last three years (using a line of best fit). Its revenue is up 255% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. It could be important to check this free visual depiction of what analysts expect for the future.
Has Panoro Energy ASA Been A Good Investment?
Panoro Energy ASA has generated a total shareholder return of 5.1% over three years, so most shareholders wouldn't be too disappointed. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
We compared total CEO remuneration at Panoro Energy ASA with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
However we must not forget that the EPS growth has been very strong over three years. We also note that, over the same time frame, shareholder returns haven't been bad. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn't call the CEO pay problematic. Moving away from CEO compensation for the moment, we've identified 3 warning signs for Panoro Energy that you should be aware of before investing.
Important note: Panoro Energy may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.
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