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Joe Salomon has been the CEO of Oilex Ltd (ASX:OEX) since 2016, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Oilex Ltd's CEO Compensation With the industry
At the time of writing, our data shows that Oilex Ltd has a market capitalization of AU$6.2m, and reported total annual CEO compensation of AU$241k for the year to June 2020. We note that's a small decrease of 7.3% on last year. We note that the salary portion, which stands at AU$199.6k constitutes the majority of total compensation received by the CEO.
In comparison with other companies in the industry with market capitalizations under AU$276m, the reported median total CEO compensation was AU$357k. Accordingly, Oilex pays its CEO under the industry median.
On an industry level, roughly 76% of total compensation represents salary and 24% is other remuneration. There isn't a significant difference between Oilex and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Oilex Ltd's Growth
Oilex Ltd has seen its earnings per share (EPS) increase by 35% a year over the past three years. It saw its revenue drop 96% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Oilex Ltd Been A Good Investment?
With a three year total loss of 67% for the shareholders, Oilex Ltd would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we noted earlier, Oilex pays its CEO lower than the norm for similar-sized companies belonging to the same industry. However, the EPS growth over three years is certainly impressive. It's tough to criticize CEO compensation when the per-share EPS movement is positive. But shareholders will likely want to hold off on any raise for Joe until investor returns are positive.
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. We did our research and identified 5 warning signs (and 3 which are concerning) in Oilex we think you should know about.
Important note: Oilex is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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