How Much is Energy World's (ASX:EWC) CEO Getting Paid?

Stewart William Elliott has been the CEO of Energy World Corporation Ltd (ASX:EWC) since 2000, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Energy World

How Does Total Compensation For Stewart William Elliott Compare With Other Companies In The Industry?

At the time of writing, our data shows that Energy World Corporation Ltd has a market capitalization of AU$129m, and reported total annual CEO compensation of US$450k for the year to June 2020. That is, the compensation was roughly the same as last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$100k.

For comparison, other companies in the industry with market capitalizations below AU$262m, reported a median total CEO compensation of US$149k. This suggests that Stewart William Elliott is paid more than the median for the industry. Moreover, Stewart William Elliott also holds AU$52m worth of Energy World stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 77% of total compensation represents salary and 23% is other remuneration. Energy World sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Energy World Corporation Ltd's Growth Numbers

Over the last three years, Energy World Corporation Ltd has shrunk its earnings per share by 24% per year. In the last year, its revenue is up 6.7%.

Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Energy World Corporation Ltd Been A Good Investment?

With a three year total loss of 79% for the shareholders, Energy World Corporation Ltd would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As previously discussed, Stewart William is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. What's equally worrying is that the company isn't growing by our analysis. Considering such poor performance, we think shareholders might be concerned if the CEO's compensation were to grow.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 5 warning signs (and 2 which are concerning) in Energy World we think you should know about.

Important note: Energy World 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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