Philip Kelso became the CEO of Bounty Oil & Gas NL (ASX:BUY) in 2008, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Bounty Oil & Gas NL's CEO Compensation With the industry
Our data indicates that Bounty Oil & Gas NL has a market capitalization of AU$15m, and total annual CEO compensation was reported as AU$402k for the year to June 2020. This means that the compensation hasn't changed much from last year. In particular, the salary of AU$398.0k, 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$263m, we found that the median total CEO compensation was AU$353k. This suggests that Bounty Oil & Gas remunerates its CEO largely in line with the industry average. What's more, Philip Kelso holds AU$532k worth of shares in the company in their own name.
On an industry level, around 76% of total compensation represents salary and 24% is other remuneration. Bounty Oil & Gas is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Bounty Oil & Gas NL's Growth
Bounty Oil & Gas NL has reduced its earnings per share by 35% a year over the last three years. It saw its revenue drop 21% over the last year.
Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Bounty Oil & Gas NL Been A Good Investment?
Boasting a total shareholder return of 100% over three years, Bounty Oil & Gas NL has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
Bounty Oil & Gas pays its CEO a majority of compensation through a salary. As we touched on above, Bounty Oil & Gas NL is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Some investors may take issue with this, especially considering shrinking EPS for the past three years. On the other hand, shareholder returns are showing positive trends over the same time frame. We're not saying CEO compensation is too generous, but shareholders might think performance needs to be improved before paying any more.
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 4 warning signs for Bounty Oil & Gas that investors should look into moving forward.
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.
When trading Bounty Oil & Gas or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email email@example.com.