The results at New Zealand Oil & Gas Limited (NZSE:NZO) have been quite disappointing recently and CEO Andrew Jefferies bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 02 November 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.
How Does Total Compensation For Andrew Jefferies Compare With Other Companies In The Industry?
Our data indicates that New Zealand Oil & Gas Limited has a market capitalization of NZ$90m, and total annual CEO compensation was reported as NZ$836k for the year to June 2021. That's a modest increase of 5.3% on the prior year. We note that the salary portion, which stands at NZ$592.8k constitutes the majority of total compensation received by the CEO.
For comparison, other companies in the industry with market capitalizations below NZ$279m, reported a median total CEO compensation of NZ$325k. This suggests that Andrew Jefferies is paid more than the median for the industry.
Talking in terms of the industry, salary represented approximately 71% of total compensation out of all the companies we analyzed, while other remuneration made up 29% of the pie. New Zealand Oil & Gas is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at New Zealand Oil & Gas Limited's Growth Numbers
Over the last three years, New Zealand Oil & Gas Limited has shrunk its earnings per share by 99% per year. It saw its revenue drop 3.4% over the last year.
Few shareholders would be pleased to read that EPS have declined. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 New Zealand Oil & Gas Limited Been A Good Investment?
Since shareholders would have lost about 13% over three years, some New Zealand Oil & Gas Limited investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.
CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for New Zealand Oil & Gas you should be aware of, and 1 of them shouldn't be ignored.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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.
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