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Should You Worry About Winchester Energy Limited's (ASX:WEL) CEO Pay Cheque?

Simply Wall St

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Neville Henry has been the CEO of Winchester Energy Limited (ASX:WEL) since 2014. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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.

View our latest analysis for Winchester Energy

How Does Neville Henry's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Winchester Energy Limited has a market cap of AU$12m, and is paying total annual CEO compensation of US$291k. (This number is for the twelve months until December 2018). That's less than last year. We think total compensation is more important but we note that the CEO salary is lower, at US$261k. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$249k.

So Neville Henry is paid around the average of 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.

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

ASX:WEL CEO Compensation, June 7th 2019

Is Winchester Energy Limited Growing?

Over the last three years Winchester Energy Limited has shrunk its earnings per share by an average of 97% per year (measured with a line of best fit). It saw its revenue drop -42% over the last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Winchester Energy Limited Been A Good Investment?

Since shareholders would have lost about 60% over three years, some Winchester Energy Limited shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Neville Henry is paid around the same as most CEOs of similar size companies.

Returns have been disappointing and the company is not growing its earnings per share. Suffice it to say, we don't think the CEO is underpaid! Whatever your view on compensation, you might want to check if insiders are buying or selling Winchester Energy shares (free trial).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.