Here's Why We Think Nostra Terra Oil and Gas Company plc's (LON:NTOG) CEO Compensation Looks Fair

Shareholders may be wondering what CEO Matt Lofgran plans to do to improve the less than great performance at Nostra Terra Oil and Gas Company plc (LON:NTOG) recently. At the next AGM coming up on 05 July 2021, they can influence managerial decision making through voting on resolutions, including executive remuneration. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. In our opinion, CEO compensation does not look excessive and we discuss why.

See our latest analysis for Nostra Terra Oil and Gas

Comparing Nostra Terra Oil and Gas Company plc's CEO Compensation With the industry

Our data indicates that Nostra Terra Oil and Gas Company plc has a market capitalization of UK£3.5m, and total annual CEO compensation was reported as US$228k for the year to December 2020. Notably, that's a decrease of 9.8% over the year before. In particular, the salary of US$205.0k, makes up a huge portion of the total compensation being paid to the CEO.

For comparison, other companies in the industry with market capitalizations below UK£144m, reported a median total CEO compensation of US$370k. This suggests that Matt Lofgran is paid below the industry median. Moreover, Matt Lofgran also holds UK£193k worth of Nostra Terra Oil and Gas stock directly under their own name.

Component	2020	2019	Proportion (2020)
Salary	US$205k	US$250k	90%
Other	US$23k	US$2.2k	10%
Total Compensation	US$228k	US$252k	100%

On an industry level, around 76% of total compensation represents salary and 24% is other remuneration. Nostra Terra Oil and Gas pays out 90% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Nostra Terra Oil and Gas Company plc's Growth Numbers

Nostra Terra Oil and Gas Company plc's earnings per share (EPS) grew 31% per year over the last three years. In the last year, its revenue is down 43%.

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. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Nostra Terra Oil and Gas Company plc Been A Good Investment?

The return of -86% over three years would not have pleased Nostra Terra Oil and Gas Company plc shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

The fact that shareholders have earned a negative share price return is certainly disconcerting. This diverges with the robust growth in EPS, suggesting that there is a large discrepancy between share price and fundamentals. A key focus for the board and management will be how to align the share price with fundamentals. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 5 warning signs for Nostra Terra Oil and Gas you should be aware of, and 4 of them shouldn't be ignored.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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