Here's Why It's Unlikely That Kosmos Energy Ltd.'s (NYSE:KOS) CEO Will See A Pay Rise This Year

By
Simply Wall St
Published
June 02, 2021
NYSE:KOS
Source: Shutterstock

The results at Kosmos Energy Ltd. (NYSE:KOS) have been quite disappointing recently and CEO Andy Inglis bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 09 June 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. From our analysis, we think CEO compensation may need a review in light of the recent performance.

See our latest analysis for Kosmos Energy

How Does Total Compensation For Andy Inglis Compare With Other Companies In The Industry?

At the time of writing, our data shows that Kosmos Energy Ltd. has a market capitalization of US$1.4b, and reported total annual CEO compensation of US$4.7m for the year to December 2020. We note that's a decrease of 8.4% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.0m.

In comparison with other companies in the industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$3.0m. Accordingly, our analysis reveals that Kosmos Energy Ltd. pays Andy Inglis north of the industry median. Furthermore, Andy Inglis directly owns US$7.1m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary US$1.0m US$1.0m 22%
Other US$3.7m US$4.1m 78%
Total CompensationUS$4.7m US$5.2m100%

Speaking on an industry level, nearly 20% of total compensation represents salary, while the remainder of 80% is other remuneration. Our data reveals that Kosmos Energy allocates salary more or less in line with the wider market. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
NYSE:KOS CEO Compensation June 3rd 2021

A Look at Kosmos Energy Ltd.'s Growth Numbers

Over the last three years, Kosmos Energy Ltd. has shrunk its earnings per share by 18% per year. Its revenue is down 42% over the previous year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Kosmos Energy Ltd. Been A Good Investment?

Few Kosmos Energy Ltd. shareholders would feel satisfied with the return of -54% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 3 warning signs for Kosmos 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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