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Roland Sleeman became the CEO of Lakes Oil NL (ASX:LKO) in 2016. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Roland Sleeman's Compensation Compare With Similar Sized Companies?
According to our data, Lakes Oil NL has a market capitalization of AU$33m, and pays its CEO total annual compensation worth AU$155k. (This is based on the year to June 2018). It is worth noting that the CEO compensation consists almost entirely of the salary, worth AU$155k. We looked at a group of companies with market capitalizations under AU$285m, and the median CEO total compensation was AU$358k.
A first glance this seems like a real positive for shareholders, since Roland Sleeman is paid less than the average total compensation paid by similar sized companies. While this is a good thing, you'll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at Lakes Oil has changed from year to year.
Is Lakes Oil NL Growing?
Lakes Oil NL has increased its earnings per share (EPS) by an average of 78% a year, over the last three years (using a line of best fit). Its revenue is down -29% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Although we don't have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Lakes Oil NL Been A Good Investment?
Since shareholders would have lost about 50% over three years, some Lakes Oil NL shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
Lakes Oil NL is currently paying its CEO below what is normal for companies of its size. Many would consider this to indicate that the pay is modest since the business is growing. Few would deny that the total shareholder return over the last three years could have been a lot better. So while we don't think, Roland Sleeman is paid too much, shareholders may hope that business performance translates to investment returns before pay rises are given out.
When I see fairly low remuneration, combined with earnings per share growth, but without big share price gains, it makes me want to research the potential for future gains. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Lakes Oil.
If you want to buy a stock that is better than Lakes Oil, this free list of high return, low debt companies is a great place to look.
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If you spot an error that warrants correction, please contact the editor at email@example.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. Thank you for reading.