Is Beach Energy Limited’s (ASX:BPT) CEO Overpaid Relative To Its Peers?

Matt Kay became the CEO of Beach Energy Limited (ASX:BPT) in 2016. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we’ll look at a snap shot of the business growth. 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.

See our latest analysis for Beach Energy

How Does Matt Kay’s Compensation Compare With Similar Sized Companies?

According to our data, Beach Energy Limited has a market capitalization of AU$4.7b, and pays its CEO total annual compensation worth AU$2.4m. (This figure is for the year to June 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at AU$903k. We examined companies with market caps from AU$2.8b to AU$9.1b, and discovered that the median CEO compensation of that group was AU$3.4m.

So Matt Kay receives a similar amount to the median CEO pay, amongst the companies we looked at. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.

You can see a visual representation of the CEO compensation at Beach Energy, below.

ASX:BPT CEO Compensation, March 11th 2019
ASX:BPT CEO Compensation, March 11th 2019

Is Beach Energy Limited Growing?

Beach Energy Limited has increased its earnings per share (EPS) by an average of 110% a year, over the last three years (using a line of best fit). It achieved revenue growth of 173% over the 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. You might want to check this free visual report on analyst forecasts for future earnings.

Has Beach Energy Limited Been A Good Investment?

Most shareholders would probably be pleased with Beach Energy Limited for providing a total return of 208% over three years. 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.

In Summary…

Matt Kay is paid around what is normal the leaders of comparable size companies.

Few would be critical of the leadership, since returns have been juicy and earnings per share are moving in the right direction. So one could argue the CEO compensation is quite modest, if you consider company performance! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Beach Energy (free visualization of insider trades).

If you want to buy a stock that is better than Beach Energy, this free list of high return, low debt companies is a great place to look.

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.

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. Thank you for reading.