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Does Cullen Resources Limited's (ASX:CUL) CEO Salary Reflect Performance?

Simply Wall St

In 2006 Chris Ringrose was appointed CEO of Cullen Resources Limited (ASX:CUL). 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 we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Cullen Resources

How Does Chris Ringrose's Compensation Compare With Similar Sized Companies?

According to our data, Cullen Resources Limited has a market capitalization of AU$2.0m, and pays its CEO total annual compensation worth AU$217k. (This figure is for the year to June 2018). We think total compensation is more important but we note that the CEO salary is lower, at AU$180k. We examined a group of similar sized companies, with market capitalizations of below AU$279m. The median CEO total compensation in that group is AU$354k.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.

The graphic below shows how CEO compensation at Cullen Resources has changed from year to year.

ASX:CUL CEO Compensation, April 18th 2019

Is Cullen Resources Limited Growing?

On average over the last three years, Cullen Resources Limited has grown earnings per share (EPS) by 22% each year (using a line of best fit). In the last year, its revenue is down -88%.

This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. Although we don't have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Cullen Resources Limited Been A Good Investment?

Since shareholders would have lost about 84% over three years, some Cullen Resources 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...

Cullen Resources Limited is currently paying its CEO below what is normal for companies of its size. Since the business is growing, many would argue this suggests the pay is modest. Few would deny that the total shareholder return over the last three years could have been a lot better. So while we don't think, Chris Ringrose is paid too much, shareholders may hope that business performance translates to investment returns before pay rises are given out.

This sort of circumstance certainly justifies further research, because the investment returns might still come in the future. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Cullen Resources (free visualization of insider trades).

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.

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.