We Think VAALCO Energy, Inc.'s (NYSE:EGY) CEO Compensation Looks Fair

Key Insights

• VAALCO Energy will host its Annual General Meeting on 6th of June
• Total pay for CEO George Maxwell includes US$550.0k salary
• The overall pay is comparable to the industry average
• VAALCO Energy's EPS grew by 35% over the past three years while total shareholder return over the past three years was 126%

The performance at VAALCO Energy, Inc. (NYSE:EGY) has been quite strong recently and CEO George Maxwell has played a role in it. Shareholders will have this at the front of their minds in the upcoming AGM on 6th of June. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. In light of the great performance, we discuss the case why we think CEO compensation is not excessive.

See our latest analysis for VAALCO Energy

How Does Total Compensation For George Maxwell Compare With Other Companies In The Industry?

At the time of writing, our data shows that VAALCO Energy, Inc. has a market capitalization of US$651m, and reported total annual CEO compensation of US$2.0m for the year to December 2023. We note that's an increase of 15% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$550k.

In comparison with other companies in the American Oil and Gas industry with market capitalizations ranging from US$400m to US$1.6b, the reported median CEO total compensation was US$2.8m. This suggests that VAALCO Energy remunerates its CEO largely in line with the industry average. Furthermore, George Maxwell directly owns US$1.5m worth of shares in the company.

Component	2023	2022	Proportion (2023)
Salary	US$550k	US$550k	28%
Other	US$1.4m	US$1.2m	72%
Total Compensation	US$2.0m	US$1.7m	100%

On an industry level, around 14% of total compensation represents salary and 86% is other remuneration. VAALCO Energy is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

VAALCO Energy, Inc.'s Growth

VAALCO Energy, Inc.'s earnings per share (EPS) grew 35% per year over the last three years. It achieved revenue growth of 30% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has VAALCO Energy, Inc. Been A Good Investment?

We think that the total shareholder return of 126%, over three years, would leave most VAALCO Energy, Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Seeing that the company has put in a relatively good performance, the CEO remuneration policy may not be the focus at the AGM. In fact, strategic decisions that could impact the future of the business might be a far more interesting topic for investors as it would help them set their longer-term expectations.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for VAALCO Energy that investors should be aware of in a dynamic business environment.

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.

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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.