Why Grand Gulf Energy Limited's (ASX:GGE) CEO Pay Matters To You
Mark Freeman became the CEO of Grand Gulf Energy Limited (ASX:GGE) in 2010. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we'll consider growth that the business demonstrates. 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.
See our latest analysis for Grand Gulf Energy
How Does Mark Freeman's Compensation Compare With Similar Sized Companies?
Our data indicates that Grand Gulf Energy Limited is worth AU$2.3m, and total annual CEO compensation is AU$200k. (This is based on the year to June 2018). Notably, the salary of AU$200k is the vast majority of the CEO compensation. We looked at a group of companies with market capitalizations under AU$295m, and the median CEO total compensation was AU$355k.
A first glance this seems like a real positive for shareholders, since Mark Freeman 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 Grand Gulf Energy has changed from year to year.
Is Grand Gulf Energy Limited Growing?
On average over the last three years, Grand Gulf Energy Limited has grown earnings per share (EPS) by 34% each year (using a line of best fit). In the last year, its revenue is down -8.3%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. We don't have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Grand Gulf Energy Limited Been A Good Investment?
Grand Gulf Energy Limited has not done too badly by shareholders, with a total return of 2.8%, over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
In Summary...
Grand Gulf Energy Limited is currently paying its CEO below what is normal for companies of its size. Considering the underlying business is growing earnings, this would suggest the pay is modest. The total shareholder return might not be amazing, but that doesn't mean that Mark Freeman is paid too much.
It's good to see reasonable payment of the CEO, even while the business improves. But for me, it's even better if insiders are also buying shares with their own cold, hard, cash. Shareholders may want to check for free if Grand Gulf Energy insiders are buying or selling shares.
Important note: Grand Gulf 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.
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.
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. Thank you for reading.
