Michael Masterman has been the CEO of Po Valley Energy Limited (ASX:PVE) since 2017. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Michael Masterman's Compensation Compare With Similar Sized Companies?
Our data indicates that Po Valley Energy Limited is worth AU$26m, and total annual CEO compensation was reported as €170k for the year to December 2019. We note that's an increase of 31% above last year. While we always look at total compensation first, we note that the salary component is less, at €140k. We took a group of companies with market capitalizations below €182m, and calculated the median CEO total compensation to be €228k.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Po Valley Energy. Speaking on an industry level, we can see that nearly 70% of total compensation represents salary, while the remainder of 30% is other remuneration. Po Valley Energy does not set aside a larger portion of remuneration in the form of salary, maintaining the same rate as the wider market.
So Michael Masterman receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance. The graphic below shows how CEO compensation at Po Valley Energy has changed from year to year.
Is Po Valley Energy Limited Growing?
Over the last three years Po Valley Energy Limited has seen earnings per share (EPS) move in a positive direction by an average of 54% per year (using a line of best fit). It saw its revenue drop 78% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. Although we don't have analyst forecasts you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Po Valley Energy Limited Been A Good Investment?
I think that the total shareholder return of 84%, over three years, would leave most Po Valley Energy Limited shareholders smiling. 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.
Michael Masterman is paid around what is normal for the leaders of comparable size companies.
The company is growing earnings per share and total shareholder returns have been pleasing. Although the pay is a normal amount, some shareholders probably consider it fair or modest, given the good performance of the stock. CEO compensation is an important area to keep your eyes on, but we've also identified 6 warning signs for Po Valley Energy (2 don't sit too well with us!) that you should be aware of before investing here.
Important note: Po Valley Energy 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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