This Is Why Oilex Ltd's (ASX:OEX) CEO Compensation Looks Appropriate

By
Simply Wall St
Published
June 01, 2021
ASX:OEX
Source: Shutterstock

Under the guidance of CEO Joe Salomon, Oilex Ltd (ASX:OEX) has performed reasonably well recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 08 June 2021. We present our case of why we think CEO compensation looks fair.

Check out our latest analysis for Oilex

Comparing Oilex Ltd's CEO Compensation With the industry

Our data indicates that Oilex Ltd has a market capitalization of AU$20m, and total annual CEO compensation was reported as AU$241k for the year to June 2020. We note that's a small decrease of 7.3% on last year. We note that the salary portion, which stands at AU$199.6k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under AU$259m, the reported median total CEO compensation was AU$330k. This suggests that Oilex remunerates its CEO largely in line with the industry average.

Component20202019Proportion (2020)
Salary AU$200k AU$210k 83%
Other AU$42k AU$50k 17%
Total CompensationAU$241k AU$260k100%

Speaking on an industry level, nearly 68% of total compensation represents salary, while the remainder of 32% is other remuneration. Oilex pays out 83% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
ASX:OEX CEO Compensation June 1st 2021

A Look at Oilex Ltd's Growth Numbers

Oilex Ltd has seen its earnings per share (EPS) increase by 40% a year over the past three years. It saw its revenue drop 96% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. 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 Oilex Ltd Been A Good Investment?

Oilex Ltd has served shareholders reasonably well, with a total return of 14% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 5 warning signs for Oilex (of which 2 don't sit too well with us!) that you should know about in order to have a holistic understanding of the stock.

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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