Yahoo Finance Here's Why Shareholders Should Examine Central Petroleum Limited's (ASX:CTP) CEO Compensation Package More Closely
Key Insights
Central Petroleum will host its Annual General Meeting on 14th of November
Salary of AU$640.1k is part of CEO Leon Devaney's total remuneration
Total compensation is 126% above industry average
Over the past three years, Central Petroleum's EPS fell by 44% and over the past three years, the total loss to shareholders 65%
The results at Central Petroleum Limited (ASX:CTP) have been quite disappointing recently and CEO Leon Devaney bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 14th of November. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.
Check out our latest analysis for Central Petroleum
How Does Total Compensation For Leon Devaney Compare With Other Companies In The Industry?
Our data indicates that Central Petroleum Limited has a market capitalization of AU$33m, and total annual CEO compensation was reported as AU$991k for the year to June 2023. We note that's a decrease of 9.2% compared to last year. Notably, the salary which is AU$640.1k, represents most of the total compensation being paid.
For comparison, other companies in the Australian Oil and Gas industry with market capitalizations below AU$312m, reported a median total CEO compensation of AU$438k. This suggests that Leon Devaney is paid more than the median for the industry. Moreover, Leon Devaney also holds AU$213k worth of Central Petroleum stock directly under their own name.
Component | 2023 | 2022 | Proportion (2023) |
Salary | AU$640k | AU$614k | 65% |
Other | AU$351k | AU$478k | 35% |
Total Compensation | AU$991k | AU$1.1m | 100% |
Speaking on an industry level, nearly 61% of total compensation represents salary, while the remainder of 39% is other remuneration. Although there is a difference in how total compensation is set, Central Petroleum more or less reflects the market in terms of setting the salary. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
Central Petroleum Limited's Growth
Over the last three years, Central Petroleum Limited has shrunk its earnings per share by 44% per year. It saw its revenue drop 6.9% over the last year.
Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Central Petroleum Limited Been A Good Investment?
Few Central Petroleum Limited shareholders would feel satisfied with the return of -65% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
In Summary...
Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 2 warning signs for Central Petroleum that investors should look into moving forward.
Switching gears from Central Petroleum, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
