David Prentice became the CEO of Brookside Energy Limited (ASX:BRK) in 2004. First, this article will compare CEO compensation with compensation at similar sized companies. 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. This method should give us information to assess how appropriately the company pays the CEO.
How Does David Prentice's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Brookside Energy Limited has a market cap of AU$5.0m, and reported total annual CEO compensation of AU$180k for the year to December 2019. Notably, the salary of AU$180k is the vast majority of the CEO compensation. We examined a group of similar sized companies, with market capitalizations of below AU$312m. The median CEO total compensation in that group is AU$389k.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Brookside Energy. On a sector level, around 70% of total compensation represents salary and 30% is other remuneration. At the company level, Brookside Energy pays David Prentice solely through a salary, preferring to go down a conventional route.
At first glance this seems like a real positive for shareholders, since David Prentice is paid less than the average total compensation paid by similar sized companies. Though positive, it's important we delve into the performance of the actual business. You can see, below, how CEO compensation at Brookside Energy has changed over time.
Is Brookside Energy Limited Growing?
On average over the last three years, Brookside Energy Limited has shrunk earnings per share by 7.7% each year (measured with a line of best fit). In the last year, its revenue is up 2132%.
As investors, we are a bit wary of companies that have lower earnings per share, over three years. On the other hand, the strong revenue growth suggests the business is growing. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. You might want to check this free visual report on analyst forecasts for future earnings.
Has Brookside Energy Limited Been A Good Investment?
Since shareholders would have lost about 60% over three years, some Brookside Energy Limited shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
It appears that Brookside Energy Limited remunerates its CEO below most similar sized companies.
It's well worth noting that while David Prentice is paid less than most company leaders (at similar sized companies), performance has been somewhat uninspiring, and total returns have been lacking. I am not concerned by the CEO compensation, but it would be good to see improved performance before pay increases. Shifting gears from CEO pay for a second, we've spotted 5 warning signs for Brookside Energy you should be aware of, and 3 of them are significant.
If you want to buy a stock that is better than Brookside Energy, 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. 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. Thank you for reading.