How Should Investors Feel About VAALCO Energy, Inc.’s (NYSE:EGY) CEO Pay?

In 2016, Cary Bounds was appointed CEO of VAALCO Energy, Inc. (NYSE:EGY). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for VAALCO Energy

How Does Cary Bounds’s Compensation Compare With Similar Sized Companies?

According to our data, VAALCO Energy, Inc. has a market capitalization of US$57m, and paid its CEO total annual compensation worth US$1.5m over the year to December 2019. That’s a notable increase of 10% on last year. We think total compensation is more important but we note that the CEO salary is lower, at US$415k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations under US$200m, and the median CEO total compensation was US$593k.

Pay mix tells us a lot about how a company functions versus the wider industry, and it’s no different in the case of VAALCO Energy. On an industry level, roughly 19% of total compensation represents salary and 81% is other remuneration. According to our research, VAALCO Energy has allocated a higher percentage of pay to salary in comparison to the broader sector.

As you can see, Cary Bounds is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean VAALCO Energy, Inc. is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous. The graphic below shows how CEO compensation at VAALCO Energy has changed from year to year.

NYSE:EGY CEO Compensation May 31st 2020
NYSE:EGY CEO Compensation May 31st 2020

Is VAALCO Energy, Inc. Growing?

On average over the last three years, VAALCO Energy, Inc. has seen earnings per share (EPS) move in a favourable direction by 5.2% each year (using a line of best fit). In the last year, its revenue is down 14%.

I would prefer it if there was revenue growth, but it is good to see EPS growth. In conclusion we can’t form a strong opinion about business performance yet; but it’s one worth watching. You might want to check this free visual report on analyst forecasts for future earnings.

Has VAALCO Energy, Inc. Been A Good Investment?

VAALCO Energy, Inc. has not done too badly by shareholders, with a total return of 2.3%, over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary…

We examined the amount VAALCO Energy, Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Over the last three years returns to investors have been uninspiring, and we would have liked to see stronger business growth. In conclusion we think the company should definitely focus on improving the business before awarding any large pay rises. Moving away from CEO compensation for the moment, we’ve identified 2 warning signs for VAALCO Energy that you should be aware of before investing.

Of course, you might find a fantastic investment by looking elsewhere. 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. Thank you for reading.