Does Grand Gulf Energy's (ASX:GGE) CEO Salary Compare Well With Industry Peers?

Mark Freeman has been the CEO of Grand Gulf Energy Limited (ASX:GGE) since 2010, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Grand Gulf Energy.

See our latest analysis for Grand Gulf Energy

Comparing Grand Gulf Energy Limited's CEO Compensation With the industry

Our data indicates that Grand Gulf Energy Limited has a market capitalization of AU$4.2m, and total annual CEO compensation was reported as AU$120k for the year to June 2020. Notably, that's a decrease of 40% over the year before. It is worth noting that the CEO compensation consists entirely of the salary, worth AU$120k.

On comparing similar-sized companies in the industry with market capitalizations below AU$259m, we found that the median total CEO compensation was AU$348k. That is to say, Mark Freeman is paid under the industry median.

On an industry level, roughly 76% of total compensation represents salary and 24% is other remuneration. Speaking on a company level, Grand Gulf Energy prefers to tread along a traditional path, disbursing all compensation through a salary. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Grand Gulf Energy Limited's Growth

Grand Gulf Energy Limited's earnings per share (EPS) grew 120% per year over the last three years. It saw its revenue drop 33% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. While it would be good to see revenue growth, profits matter more in the end. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Grand Gulf Energy Limited Been A Good Investment?

Most shareholders would probably be pleased with Grand Gulf Energy Limited for providing a total return of 106% over three years. 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.

To Conclude...

Grand Gulf Energy pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we noted earlier, Grand Gulf Energy pays its CEO lower than the norm for similar-sized companies belonging to the same industry. Considering robust EPS growth, we believe Mark to be modestly paid. Plus, we can't ignore the impressive shareholder returns, and won't be surprised if some shareholders were to reward such excellent all-around performance with a raise.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for Grand Gulf Energy you should be aware of, and 1 of them shouldn't be ignored.

Important note: Grand Gulf Energy is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE 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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