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Does Gas2Grid Limited's (ASX:GGX) CEO Pay Reflect Performance?

Simply Wall St

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Dennis Morton became the CEO of Gas2Grid Limited (ASX:GGX) in 2008. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Gas2Grid

How Does Dennis Morton's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Gas2Grid Limited has a market cap of AU$2.3m, and is paying total annual CEO compensation of AU$145k. (This number is for the twelve months until June 2018). It is worth noting that the CEO compensation consists almost entirely of the salary, worth AU$145k. We examined a group of similar sized companies, with market capitalizations of below AU$292m. The median CEO total compensation in that group is AU$359k.

A first glance this seems like a real positive for shareholders, since Dennis Morton is paid less than the average total compensation paid by similar sized companies. While this is a good thing, you'll need to understand the business better before you can form an opinion.

You can see a visual representation of the CEO compensation at Gas2Grid, below.

ASX:GGX CEO Compensation, June 19th 2019

Is Gas2Grid Limited Growing?

Over the last three years Gas2Grid Limited has grown its earnings per share (EPS) by an average of 76% per year (using a line of best fit). Its revenue is down -94% over last year.

This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Gas2Grid Limited Been A Good Investment?

With a three year total loss of 33%, Gas2Grid Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

It appears that Gas2Grid Limited remunerates its CEO below most similar sized companies. Since the business is growing, many would argue this suggests the pay is modest. Unfortunately, some shareholders may be disappointed with their returns, given the company's performance over the last three years. We're not critical of the remuneration Dennis Morton receives, but it would be good to see improved returns to shareholders before the remuneration grows too much.

This sort of circumstance certainly justifies further research, because the investment returns might still come in the future. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Gas2Grid.

If you want to buy a stock that is better than Gas2Grid, this free list of high return, low debt companies is a great place to look.

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.