This article will reflect on the compensation paid to Peter Lansom who has served as CEO of Galilee Energy Limited (ASX:GLL) since 2013. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
View our latest analysis for Galilee Energy
Comparing Galilee Energy Limited's CEO Compensation With the industry
Our data indicates that Galilee Energy Limited has a market capitalization of AU$242m, and total annual CEO compensation was reported as AU$823k for the year to June 2020. Notably, that's a decrease of 21% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$389k.
On comparing similar companies from the same industry with market caps ranging from AU$129m to AU$516m, we found that the median CEO total compensation was AU$821k. So it looks like Galilee Energy compensates Peter Lansom in line with the median for the industry. Furthermore, Peter Lansom directly owns AU$9.9m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$389k | AU$387k | 47% |
| Other | AU$434k | AU$654k | 53% |
| Total Compensation | AU$823k | AU$1.0m | 100% |
Speaking on an industry level, nearly 71% of total compensation represents salary, while the remainder of 29% is other remuneration. Galilee Energy pays a modest slice of remuneration through salary, as compared to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
Galilee Energy Limited's Growth
Over the last three years, Galilee Energy Limited has shrunk its earnings per share by 36% per year. In the last year, its revenue is up 11%.
Few shareholders would be pleased to read that EPS have declined. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. 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 Galilee Energy Limited Been A Good Investment?
We think that the total shareholder return of 413%, over three years, would leave most Galilee Energy Limited shareholders smiling. 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...
As we noted earlier, Galilee Energy pays its CEO in line with similar-sized companies belonging to the same industry. This isn't great when you look at it against the backdrop of EPS growth, which has been negative for the past three years. On the flip side, shareholder returns have been strong over the same time, which is certainly a positive sign. We're not saying CEO compensation is too generous, but shareholders will probably want to see an increase in EPS before agreeing the business should pay any more.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 5 warning signs for Galilee Energy (2 are concerning!) that you should be aware of before investing here.
Important note: Galilee 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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About ASX:GLL
Galilee Energy
Through its subsidiaries, engages in the exploration and production of oil and gas properties in Australia, the United States, and Chile.
Excellent balance sheet slight.
