Is Abraxas Petroleum Corporation's (NASDAQ:AXAS) CEO Pay Justified?

Bob Watson became the CEO of Abraxas Petroleum Corporation (NASDAQ:AXAS) in 1977. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Abraxas Petroleum

How Does Bob Watson's Compensation Compare With Similar Sized Companies?

According to our data, Abraxas Petroleum Corporation has a market capitalization of US$39m, and paid its CEO total annual compensation worth US$853k over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$505k. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$519k.

It would therefore appear that Abraxas Petroleum Corporation pays Bob Watson more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see, below, how CEO compensation at Abraxas Petroleum has changed over time.

Is Abraxas Petroleum Corporation Growing?

Over the last three years Abraxas Petroleum Corporation has grown its earnings per share (EPS) by an average of 129% per year (using a line of best fit). It saw its revenue drop 4.1% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. You might want to check this free visual report on analyst forecasts for future earnings.

Has Abraxas Petroleum Corporation Been A Good Investment?

Since shareholders would have lost about 90% over three years, some Abraxas Petroleum Corporation shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared the total CEO remuneration paid by Abraxas Petroleum Corporation, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

However, the earnings per share growth over three years is certainly impressive. Having said that, shareholders may be disappointed with the weak returns over the last three years. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Abraxas Petroleum.

If you want to buy a stock that is better than Abraxas Petroleum, this free list of high return, low debt companies is a great place to look.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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