Paul Fink has been the CEO of ADX Energy Ltd (ASX:ADX) since 2015, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for ADX Energy
How Does Total Compensation For Paul Fink Compare With Other Companies In The Industry?
According to our data, ADX Energy Ltd has a market capitalization of AU$10m, and paid its CEO total annual compensation worth AU$376k over the year to December 2019. That's a notable increase of 25% on last year. In particular, the salary of AU$246.6k, 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$264m, reported a median total CEO compensation of AU$353k. From this we gather that Paul Fink is paid around the median for CEOs in the industry. Furthermore, Paul Fink directly owns AU$425k worth of shares in the company.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | AU$247k | AU$259k | 66% |
| Other | AU$129k | AU$42k | 34% |
| Total Compensation | AU$376k | AU$301k | 100% |
On an industry level, around 76% of total compensation represents salary and 24% is other remuneration. It's interesting to note that ADX Energy allocates a smaller portion of compensation to salary in comparison to the broader industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
ADX Energy Ltd's Growth
ADX Energy Ltd's earnings per share (EPS) grew 30% per year over the last three years. It achieved revenue growth of 830% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has ADX Energy Ltd Been A Good Investment?
With a three year total loss of 54% for the shareholders, ADX Energy Ltd would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
As previously discussed, Paul is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, the company has logged negative shareholder returns over the previous three years. However, EPS growth is positive over the same time frame. Overall, we wouldn't say Paul is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 5 warning signs for ADX Energy (2 are a bit concerning!) 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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About ASX:ADX
ADX Energy
Engages in the exploration, appraisal, and production of oil and gas properties.
Slight and fair value.
