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Is VAALCO Energy, Inc. (NYSE:EGY) Overpaying Its CEO?

Simply Wall St

Cary Bounds became the CEO of VAALCO Energy, Inc. (NYSE:EGY) in 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for VAALCO Energy

How Does Cary Bounds's Compensation Compare With Similar Sized Companies?

According to our data, VAALCO Energy, Inc. has a market capitalization of US$130m, and paid its CEO total annual compensation worth US$1.4m over the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$400k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO total compensation in that group is US$523k.

Thus we can conclude that Cary Bounds receives more in total compensation than the median of a group of companies in the same market, and of similar size to VAALCO Energy, Inc.. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see, below, how CEO compensation at VAALCO Energy has changed over time.

NYSE:EGY CEO Compensation, February 4th 2020

Is VAALCO Energy, Inc. Growing?

VAALCO Energy, Inc. has increased its earnings per share (EPS) by an average of 103% a year, over the last three years (using a line of best fit). It saw its revenue drop 4.5% over the last year.

This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Shareholders might be interested in this free visualization of analyst forecasts.

Has VAALCO Energy, Inc. Been A Good Investment?

Most shareholders would probably be pleased with VAALCO Energy, Inc. for providing a total return of 90% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

We compared the total CEO remuneration paid by VAALCO Energy, Inc., 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.

Importantly, though, the company has impressed with its earnings per share growth, over three years. In addition, shareholders have done well over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. So you may want to check if insiders are buying VAALCO Energy shares with their own money (free access).

Important note: VAALCO 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 editorial-team@simplywallst.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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.