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Shareholders May Be Wary Of Increasing Abraxas Petroleum Corporation's (NASDAQ:AXAS) CEO Compensation Package

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The results at Abraxas Petroleum Corporation (NASDAQ:AXAS) have been quite disappointing recently and CEO Bob Watson bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 13 July 2021. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for Abraxas Petroleum

Comparing Abraxas Petroleum Corporation's CEO Compensation With the industry

According to our data, Abraxas Petroleum Corporation has a market capitalization of US$26m, and paid its CEO total annual compensation worth US$395k over the year to December 2020. Notably, that's a decrease of 41% over the year before. In particular, the salary of US$382.1k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$326k. So it looks like Abraxas Petroleum compensates Bob Watson in line with the median for the industry. Moreover, Bob Watson also holds US$300k worth of Abraxas Petroleum stock directly under their own name.

Component

2020

2019

Proportion (2020)

Salary

US$382k

US$532k

97%

Other

US$13k

US$143k

3%

Total Compensation

US$395k

US$675k

100%

Speaking on an industry level, nearly 21% of total compensation represents salary, while the remainder of 79% is other remuneration. Abraxas Petroleum pays a high salary, concentrating more on this aspect of compensation in comparison to non-salary pay. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
ceo-compensation

A Look at Abraxas Petroleum Corporation's Growth Numbers

Over the last three years, Abraxas Petroleum Corporation has shrunk its earnings per share by 111% per year. Its revenue is down 60% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Abraxas Petroleum Corporation Been A Good Investment?

Few Abraxas Petroleum Corporation shareholders would feel satisfied with the return of -95% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Abraxas Petroleum pays its CEO a majority of compensation through a salary. Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

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. In our study, we found 4 warning signs for Abraxas Petroleum you should be aware of, and 1 of them is potentially serious.

Switching gears from Abraxas Petroleum, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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