Peter Botten became the CEO of Oil Search Limited (ASX:OSH) in 1994. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Peter Botten’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Oil Search Limited has a market cap of AU$11b, and reported total annual CEO compensation of US$5.9m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$1.7m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$4.0b to US$12b. The median total CEO compensation was US$2.9m.
It would therefore appear that Oil Search Limited pays Peter Botten more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Oil Search has changed from year to year.
Is Oil Search Limited Growing?
Over the last three years Oil Search Limited has grown its earnings per share (EPS) by an average of 69% per year (using a line of best fit). Its revenue is up 32% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It’s great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Shareholders might be interested in this free visualization of analyst forecasts.
Has Oil Search Limited Been A Good Investment?
Oil Search Limited has generated a total shareholder return of 10% over three years, so most shareholders would be reasonably content. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.
We compared total CEO remuneration at Oil Search Limited with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
However, the earnings per share growth over three years is certainly impressive. We also note that, over the same time frame, shareholder returns haven’t been bad. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn’t call the CEO pay problematic. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Oil Search (free visualization of insider trades).
If you want to buy a stock that is better than Oil Search, this free list of high return, low debt companies is a great place to look.
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.
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.