How Should Investors React To Po Valley Energy's (ASX:PVE) CEO Pay?

Michael Masterman has been the CEO of Po Valley Energy Limited (ASX:PVE) since 2017, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Po Valley Energy pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Po Valley Energy

Comparing Po Valley Energy Limited's CEO Compensation With the industry

According to our data, Po Valley Energy Limited has a market capitalization of AU$17m, and paid its CEO total annual compensation worth €170k over the year to December 2019. That's a notable increase of 31% on last year. Notably, the salary which is €140.0k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under AU$265m, the reported median total CEO compensation was €220k. So it looks like Po Valley Energy compensates Michael Masterman in line with the median for the industry. What's more, Michael Masterman holds AU$4.5m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, around 76% of total compensation represents salary and 24% is other remuneration. Our data reveals that Po Valley Energy allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

A Look at Po Valley Energy Limited's Growth Numbers

Po Valley Energy Limited has reduced its earnings per share by 32% a year over the last three years. In the last year, its revenue is up 7,371%.

Investors would be a bit wary of companies that have lower EPS But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Po Valley Energy Limited Been A Good Investment?

Given the total shareholder loss of 1.7% over three years, many shareholders in Po Valley Energy Limited are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.

To Conclude...

As we touched on above, Po Valley Energy Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Still, the company is logging healthy revenue growth over the last year. On the other hand, shareholder returns for Michael are negative over the same period. EPS growth is bleak as well, adding fuel to the fire. We'd say CEO compensation isn't unfair, but shareholders may be wary of a bump in pay before the company substantially improves overall performance.

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 Po Valley Energy you should be aware of, and 2 of them shouldn't be ignored.

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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