Shareholders Will Probably Hold Off On Increasing New Zealand Oil & Gas Limited's (NZSE:NZO) CEO Compensation For The Time Being

Key Insights

• New Zealand Oil & Gas to hold its Annual General Meeting on 11th of December
• Total pay for CEO Andrew Jefferies includes NZ$684.8k salary
• The overall pay is 118% above the industry average
• Over the past three years, New Zealand Oil & Gas' EPS grew by 84% and over the past three years, the total loss to shareholders 44%

The underwhelming share price performance of New Zealand Oil & Gas Limited (NZSE:NZO) in the past three years would have disappointed many shareholders. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 11th of December. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See our latest analysis for New Zealand Oil & Gas

How Does Total Compensation For Andrew Jefferies Compare With Other Companies In The Industry?

At the time of writing, our data shows that New Zealand Oil & Gas Limited has a market capitalization of NZ$83m, and reported total annual CEO compensation of NZ$1.0m for the year to June 2023. That's a notable increase of 13% on last year. In particular, the salary of NZ$684.8k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the New Zealand Oil and Gas industry with market capitalizations under NZ$324m, the reported median total CEO compensation was NZ$468k. Hence, we can conclude that Andrew Jefferies is remunerated higher than the industry median.

Component	2023	2022	Proportion (2023)
Salary	NZ$685k	NZ$642k	67%
Other	NZ$336k	NZ$259k	33%
Total Compensation	NZ$1.0m	NZ$902k	100%

On an industry level, roughly 63% of total compensation represents salary and 37% is other remuneration. Our data reveals that New Zealand Oil & Gas allocates salary more or less in line with the wider market. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

New Zealand Oil & Gas Limited's Growth

Over the past three years, New Zealand Oil & Gas Limited has seen its earnings per share (EPS) grow by 84% per year. It achieved revenue growth of 18% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. 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?

With a total shareholder return of -44% over three years, New Zealand Oil & Gas Limited shareholders would by and large be disappointed. 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. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. 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.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 2 warning signs for New Zealand Oil & Gas that investors should be aware of in a dynamic business environment.

Important note: New Zealand Oil & Gas 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.