Jess Oram became the CEO of Cauldron Energy Limited (ASX:CXU) in 2018, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Cauldron Energy.
Check out our latest analysis for Cauldron Energy
How Does Total Compensation For Jess Oram Compare With Other Companies In The Industry?
According to our data, Cauldron Energy Limited has a market capitalization of AU$22m, and paid its CEO total annual compensation worth AU$255k over the year to June 2020. This means that the compensation hasn't changed much from last year. In particular, the salary of AU$229.4k, 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$259m, we found that the median total CEO compensation was AU$349k. This suggests that Cauldron Energy remunerates its CEO largely in line with the industry average.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$229k | AU$226k | 90% |
| Other | AU$26k | AU$25k | 10% |
| Total Compensation | AU$255k | AU$251k | 100% |
On an industry level, around 76% of total compensation represents salary and 24% is other remuneration. Cauldron Energy is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Cauldron Energy Limited's Growth Numbers
Cauldron Energy Limited's earnings per share (EPS) grew 66% per year over the last three years. Its revenue is up 443% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. 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 Cauldron Energy Limited Been A Good Investment?
With a three year total loss of 28% for the shareholders, Cauldron Energy Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
As we noted earlier, Cauldron Energy pays its CEO in line with similar-sized companies belonging to the same industry. At the same time, the company has logged negative shareholder returns over the last three years. However, EPS growth is positive over the same time frame. Overall, we wouldn't say Jess is paid an unjustified compensation, but shareholders might not favor a raise before shareholder returns show a positive trend.
CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 5 warning signs for Cauldron Energy you should be aware of, and 2 of them are potentially serious.
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.
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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:CXU
Cauldron Energy
Operates as a mineral exploration and resource development company in Australia.
Flawless balance sheet moderate.
