In 2014 Frank Lodzinski was appointed CEO of Earthstone Energy, Inc. (NYSE:ESTE). 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 Frank Lodzinski's Compensation Compare With Similar Sized Companies?
According to our data, Earthstone Energy, Inc. has a market capitalization of US$306m, and paid its CEO total annual compensation worth US$2.9m over the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$450k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a selection of companies with market caps ranging from US$200m to US$800m, we found the median CEO total compensation was US$1.7m.
It would therefore appear that Earthstone Energy, Inc. pays Frank Lodzinski 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 get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see a visual representation of the CEO compensation at Earthstone Energy, below.
Is Earthstone Energy, Inc. Growing?
Over the last three years Earthstone Energy, Inc. has grown its earnings per share (EPS) by an average of 127% per year (using a line of best fit). It achieved revenue growth of 4.3% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. It could be important to check this free visual depiction of what analysts expect for the future.
Has Earthstone Energy, Inc. Been A Good Investment?
With a three year total loss of 64%, Earthstone Energy, Inc. would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
We examined the amount Earthstone Energy, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. 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. Having said that, shareholders may be disappointed with the weak returns over the last three years. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Earthstone Energy.
Important note: Earthstone 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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