A Quick Analysis On Energy Technologies' (ASX:EGY) CEO Compensation

This article will reflect on the compensation paid to Alfred Chown who has served as CEO of Energy Technologies Limited (ASX:EGY) since 2012. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Energy Technologies.

Check out our latest analysis for Energy Technologies

How Does Total Compensation For Alfred Chown Compare With Other Companies In The Industry?

Our data indicates that Energy Technologies Limited has a market capitalization of AU$25m, and total annual CEO compensation was reported as AU$338k for the year to June 2020. That's a notable decrease of 28% on last year. In particular, the salary of AU$310.1k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below AU$254m, we found that the median total CEO compensation was AU$149k. This suggests that Alfred Chown is paid more than the median for the industry. What's more, Alfred Chown holds AU$1.2m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, around 70% of total compensation represents salary and 30% is other remuneration. Energy Technologies pays out 92% of remuneration in the form of a salary, significantly higher than the industry average. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Energy Technologies Limited's Growth Numbers

Over the past three years, Energy Technologies Limited has seen its earnings per share (EPS) grow by 80% per year. In the last year, its revenue is down 20%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Energy Technologies Limited Been A Good Investment?

Since shareholders would have lost about 57% over three years, some Energy Technologies Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As previously discussed, Alfred is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. But the company has impressed with its EPS growth, but it's disappointing to see negative shareholder returns over the same period. Although we'd stop short of calling it inappropriate, we think Alfred is earning a very handsome sum.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for Energy Technologies (1 is a bit unpleasant!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.
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