It May Be Possible That Santos Limited's (ASX:STO) CEO Compensation Could Get Bumped Up

Key Insights

• Santos to hold its Annual General Meeting on 11th of April
• Salary of US$1.32m is part of CEO Kevin Gallagher's total remuneration
• Total compensation is 33% below industry average
• Over the past three years, Santos' EPS grew by 54% and over the past three years, the total shareholder return was 25%

The decent performance at Santos Limited (ASX:STO) recently will please most shareholders as they go into the AGM coming up on 11th of April. This would also be a chance for them to hear the board review the financial results, discuss future company strategy to further improve the business and vote on any resolutions such as executive remuneration. In our analysis below, we discuss why we think the CEO compensation looks acceptable and the case for a raise.

Check out our latest analysis for Santos

How Does Total Compensation For Kevin Gallagher Compare With Other Companies In The Industry?

Our data indicates that Santos Limited has a market capitalization of AU$25b, and total annual CEO compensation was reported as US$5.5m for the year to December 2023. That's a notable decrease of 9.1% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.3m.

On comparing similar companies in the Australian Oil and Gas industry with market capitalizations above AU$12b, we found that the median total CEO compensation was US$8.2m. In other words, Santos pays its CEO lower than the industry median. Furthermore, Kevin Gallagher directly owns AU$14m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$1.3m	US$1.4m	24%
Other	US$4.2m	US$4.7m	76%
Total Compensation	US$5.5m	US$6.1m	100%

On an industry level, roughly 61% of total compensation represents salary and 39% is other remuneration. Santos sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Santos Limited's Growth Numbers

Over the past three years, Santos Limited has seen its earnings per share (EPS) grow by 54% per year. In the last year, its revenue is down 24%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Santos Limited Been A Good Investment?

Santos Limited has served shareholders reasonably well, with a total return of 25% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

Overall, the company hasn't done too poorly performance-wise, but we would like to see some improvement. If it continues on the same road, shareholders might feel even more confident about their investment, and have little to no objections concerning CEO pay. Rather, investors would more likely want to engage on discussions related to key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 2 warning signs for Santos that investors should be aware of in a dynamic business environment.

Important note: Santos 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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.