Joe Salomon became the CEO of Oilex Ltd (ASX:OEX) in 2016. 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 process should give us an idea about how appropriately the CEO is paid.
How Does Joe Salomon's Compensation Compare With Similar Sized Companies?
Our data indicates that Oilex Ltd is worth AU$6.9m, and total annual CEO compensation was reported as AU$260k for the year to June 2019. We think total compensation is more important but we note that the CEO salary is lower, at AU$210k. We looked at a group of companies with market capitalizations under AU$315m, and the median CEO total compensation was AU$390k.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Talking in terms of the sector, salary represented approximately 73% of total compensation out of all the companies we analysed, while other remuneration made up 27% of the pie. Our data reveals that Oilex allocates salary in line with the wider market.
At first glance this seems like a real positive for shareholders, since Joe Salomon 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, below, how CEO compensation at Oilex has changed over time.
Is Oilex Ltd Growing?
Oilex Ltd has seen earnings per share (EPS) move positively by an average of 77% a year, over the last three years (using a line of best fit). Its revenue is down 94% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. Revenue growth is a real positive for growth, but ultimately profits are more important. We don't have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Oilex Ltd Been A Good Investment?
With a three year total loss of 60%, Oilex Ltd would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
Oilex Ltd is currently paying its CEO below what is normal for companies of its size.
Considering the underlying business is growing earnings, this would suggest the pay is modest. Unfortunately, some shareholders may be disappointed with their returns, given the company's performance over the last three years. So while we don't think, Joe Salomon is paid too much, shareholders may hope that business performance translates to investment returns before pay rises are given out. When I see fairly low remuneration, combined with earnings per share growth, but without big share price gains, it makes me want to research the potential for future gains. CEO compensation is an important area to keep your eyes on, but we've also identified 6 warning signs for Oilex (3 are significant!) that you should be aware of before investing here.
Important note: Oilex may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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