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This Is The Reason Why We Think Red Sky Energy Limited's (ASX:ROG) CEO Might Be Underpaid

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The impressive results at Red Sky Energy Limited (ASX:ROG) recently will be great news for shareholders. At the upcoming AGM on 10 June 2021, they would be interested to hear about the company strategy going forward and get a chance to cast their votes on resolutions such as executive remuneration and other company matters. Let's take a look at why we think the CEO has done a good job and we'll present the case for a bump in pay.

View our latest analysis for Red Sky Energy

Comparing Red Sky Energy Limited's CEO Compensation With the industry

At the time of writing, our data shows that Red Sky Energy Limited has a market capitalization of AU$37m, and reported total annual CEO compensation of AU$184k for the year to December 2020. That's just a smallish increase of 4.9% on last year. In particular, the salary of AU$156.0k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below AU$258m, reported a median total CEO compensation of AU$332k. That is to say, Andrew Knox is paid under the industry median. Furthermore, Andrew Knox directly owns AU$1.1m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2020

2019

Proportion (2020)

Salary

AU$156k

AU$156k

85%

Other

AU$28k

AU$19k

15%

Total Compensation

AU$184k

AU$175k

100%

On an industry level, roughly 68% of total compensation represents salary and 32% is other remuneration. It's interesting to note that Red Sky Energy pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
ceo-compensation

A Look at Red Sky Energy Limited's Growth Numbers

Red Sky Energy Limited has seen its earnings per share (EPS) increase by 33% a year over the past three years. In the last year, its revenue is up 15,959%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Red Sky Energy Limited Been A Good Investment?

Boasting a total shareholder return of 220% over three years, Red Sky Energy Limited has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Seeing that company performance has been quite good recently, some shareholders may feel that CEO compensation may not be the biggest focus in the upcoming AGM. Seeing that earnings growth and share price performance seems to be on the right path, the more pressing focus for shareholders at the AGM may be how the board and management plans to turn the company into a sustainably profitable one.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 5 warning signs (and 3 which are a bit unpleasant) in Red Sky Energy we think you should know about.

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.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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