Shareholders May Be More Conservative With New Zealand Oil & Gas Limited's (NZSE:NZO) CEO Compensation For Now

In the past three years, the share price of New Zealand Oil & Gas Limited (NZSE:NZO) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. The AGM coming up on the 01 November 2022 could be an opportunity for shareholders to bring these concerns to the board's attention. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

Check out the opportunities and risks within the XX Oil and Gas industry.

Comparing New Zealand Oil & Gas Limited's CEO Compensation With The Industry

Our data indicates that New Zealand Oil & Gas Limited has a market capitalization of NZ$99m, and total annual CEO compensation was reported as NZ$902k for the year to June 2022. That's just a smallish increase of 7.9% on last year. In particular, the salary of NZ$642.4k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under NZ$347m, the reported median total CEO compensation was NZ$417k. Accordingly, our analysis reveals that New Zealand Oil & Gas Limited pays Andrew Jefferies north of the industry median.

Component	2022	2021	Proportion (2022)
Salary	NZ$642k	NZ$593k	71%
Other	NZ$259k	NZ$243k	29%
Total Compensation	NZ$902k	NZ$836k	100%

On an industry level, roughly 53% of total compensation represents salary and 47% is other remuneration. It's interesting to note that New Zealand Oil & Gas 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.

New Zealand Oil & Gas Limited's Growth

New Zealand Oil & Gas Limited's earnings per share (EPS) grew 23% per year over the last three years. It achieved revenue growth of 133% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. 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 New Zealand Oil & Gas Limited Been A Good Investment?

Few New Zealand Oil & Gas Limited shareholders would feel satisfied with the return of -36% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

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 4 warning signs for New Zealand Oil & Gas you should be aware of, and 1 of them can'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. 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.