In 2016 Frank Calabria was appointed CEO of Origin Energy Limited (ASX:ORG). First, this article will compare CEO compensation with compensation at other large companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Frank Calabria's Compensation Compare With Similar Sized Companies?
According to our data, Origin Energy Limited has a market capitalization of AU$15b, and paid its CEO total annual compensation worth AU$4.6m over the year to June 2019. Notably, that's an increase of 12% over the year before. While we always look at total compensation first, we note that the salary component is less, at AU$1.7m. 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 group of companies with market caps over AU$12b, we found that their median CEO total compensation was AU$5.5m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).
So Frank Calabria receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
The graphic below shows how CEO compensation at Origin Energy has changed from year to year.
Is Origin Energy Limited Growing?
Over the last three years Origin Energy Limited has grown its earnings per share (EPS) by an average of 87% per year (using a line of best fit). Revenue was pretty flat on last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. You might want to check this free visual report on analyst forecasts for future earnings.
Has Origin Energy Limited Been A Good Investment?
I think that the total shareholder return of 40%, over three years, would leave most Origin Energy Limited shareholders smiling. 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.
Remuneration for Frank Calabria is close enough to the median pay for a CEO of a large company .
Few would be critical of the leadership, since returns have been juicy and earnings per share are moving in the right direction. Although the pay is a normal amount, some shareholders probably consider it fair or modest, given the good performance of the stock. Whatever your view on compensation, you might want to check if insiders are buying or selling Origin Energy shares (free trial).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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