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Is Karoon Energy Ltd's (ASX:KAR) CEO Being Overpaid?

Simply Wall St

In 2014 Robert Hosking was appointed CEO of Karoon Energy Ltd (ASX:KAR). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Karoon Energy

How Does Robert Hosking's Compensation Compare With Similar Sized Companies?

According to our data, Karoon Energy Ltd has a market capitalization of AU$719m, and paid its CEO total annual compensation worth AU$1.2m over the year to June 2019. We think total compensation is more important but we note that the CEO salary is lower, at AU$600k. We examined companies with market caps from AU$291m to AU$1.2b, and discovered that the median CEO total compensation of that group was AU$1.1m.

That means Robert Hosking 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.

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

ASX:KAR CEO Compensation, January 9th 2020

Is Karoon Energy Ltd Growing?

On average over the last three years, Karoon Energy Ltd has shrunk earnings per share by 19% each year (measured with a line of best fit). In the last year, its revenue is up 228%.

Investors should note that, over three years, earnings per share are down. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. You might want to check this free visual report on analyst forecasts for future earnings.

Has Karoon Energy Ltd Been A Good Investment?

Since shareholders would have lost about 23% over three years, some Karoon Energy Ltd shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Robert Hosking is paid around the same as most CEOs of similar size companies.

The per share growth could be better, in our view. And shareholder returns have been disappointing over the last three years. So many would argue that the CEO is certainly not underpaid. Shareholders may want to check for free if Karoon Energy insiders are buying or selling shares.

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.

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.