Shareholders May Be More Conservative With Central Petroleum Limited's (ASX:CTP) CEO Compensation For Now

In the past three years, shareholders of Central Petroleum Limited (ASX:CTP) have seen a loss on their investment. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 10 November 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Central Petroleum

How Does Total Compensation For Leon Devaney Compare With Other Companies In The Industry?

According to our data, Central Petroleum Limited has a market capitalization of AU$91m, and paid its CEO total annual compensation worth AU$1.0m over the year to June 2021. Notably, that's an increase of 20% over the year before. We note that the salary of AU$623.3k makes up a sizeable portion of the total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below AU$269m, we found that the median total CEO compensation was AU$315k. This suggests that Leon Devaney is paid more than the median for the industry. Moreover, Leon Devaney also holds AU$326k worth of Central Petroleum stock directly under their own name.

Component	2021	2020	Proportion (2021)
Salary	AU$623k	AU$601k	60%
Other	AU$424k	AU$273k	40%
Total Compensation	AU$1.0m	AU$874k	100%

Talking in terms of the industry, salary represented approximately 71% of total compensation out of all the companies we analyzed, while other remuneration made up 29% of the pie. In Central Petroleum's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Central Petroleum Limited's Growth

Central Petroleum Limited's earnings per share (EPS) grew 99% per year over the last three years. Its revenue is down 8.0% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Central Petroleum Limited Been A Good Investment?

With a three year total loss of 7.4% for the shareholders, Central Petroleum Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 3 warning signs (and 1 which is a bit concerning) in Central Petroleum we think you should know about.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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