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

Simply Wall St
·3 mins read

In 2014 Neville Henry was appointed CEO of Winchester Energy Limited (ASX:WEL). 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. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

Check out 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$34m, and reported total annual CEO compensation of US$291k for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$261k. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO total compensation in that group is US$261k.

That means Neville Henry receives fairly typical remuneration for the CEO of a company that size. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.

The graphic below shows how CEO compensation at Winchester Energy has changed from year to year.

ASX:WEL CEO Compensation, January 29th 2020
ASX:WEL CEO Compensation, January 29th 2020

Is Winchester Energy Limited Growing?

Winchester Energy Limited has reduced its earnings per share by an average of 57% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is down 33%.

Sadly for shareholders, earnings per share are actually down, over three years. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Winchester Energy Limited Been A Good Investment?

With a three year total loss of 46%, Winchester Energy Limited would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Remuneration for Neville Henry is close enough to the median pay for a CEO of a similar sized company .

The company isn't growing EPS, and shareholder returns have been disappointing. Few would argue that it's wise for the company to pay any more, before returns improve. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Winchester Energy.

If you want to buy a stock that is better than Winchester Energy, this free list of high return, low debt companies is a great place to look.

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.

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. Thank you for reading.