Yahoo Finance Is Talon Petroleum Limited (ASX:TPD) Overpaying Its CEO?
Matt Worner is the CEO of Talon Petroleum Limited (ASX:TPD). 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 - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
See our latest analysis for Talon Petroleum
How Does Matt Worner's Compensation Compare With Similar Sized Companies?
According to our data, Talon Petroleum Limited has a market capitalization of AU$3.6m, and paid its CEO total annual compensation worth AU$139k over the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at AU$109k. We examined a group of similar sized companies, with market capitalizations of below AU$300m. The median CEO total compensation in that group is AU$379k.
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.
You can see, below, how CEO compensation at Talon Petroleum has changed over time.
Is Talon Petroleum Limited Growing?
Over the last three years Talon Petroleum Limited has grown its earnings per share (EPS) by an average of 48% per year (using a line of best fit). In the last year, its revenue is up 17%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Talon Petroleum Limited Been A Good Investment?
Since shareholders would have lost about 67% over three years, some Talon Petroleum 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...
It appears that Talon Petroleum Limited remunerates its CEO below most similar sized companies.
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 would not say that Matt Worner is generously paid, it would be good to see an improvement in business performance before too an increase in pay. In this case we may want to look deeper into the company. There are some real positives and we could see improved returns in the longer term. So you may want to check if insiders are buying Talon Petroleum shares with their own money (free access).
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.
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