The CEO of Eneco Refresh Limited (ASX:ERG) is Henry Heng, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Eneco Refresh Limited's CEO Compensation With the industry
Our data indicates that Eneco Refresh Limited has a market capitalization of AU$11m, and total annual CEO compensation was reported as AU$249k for the year to June 2020. We note that's an increase of 9.4% above last year. Notably, the salary which is AU$173.7k, represents most of the total compensation being paid.
On comparing similar-sized companies in the industry with market capitalizations below AU$257m, we found that the median total CEO compensation was AU$476k. In other words, Eneco Refresh pays its CEO lower than the industry median. What's more, Henry Heng holds AU$787k 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, roughly 52% of total compensation represents salary and 48% is other remuneration. It's interesting to note that Eneco Refresh pays out a greater portion of remuneration through salary, compared to the industry. 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.
Eneco Refresh Limited's Growth
Eneco Refresh Limited has reduced its earnings per share by 20% a year over the last three years. In the last year, its revenue is up 24%.
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 Eneco Refresh Limited Been A Good Investment?
With a three year total loss of 51% for the shareholders, Eneco Refresh Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
As we touched on above, Eneco Refresh Limited is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But Eneco Refresh has recorded negative shareholder returns and EPS growth over the last three years. On the flip side, recent revenue growth has been positive. Although it's fair to say CEO compensation is modest, shareholders might want to see healthier investor returns before thinking Henry deserves a raise.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 4 warning signs for Eneco Refresh that investors should look into moving forward.
Important note: Eneco Refresh 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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