Should Shareholders Reconsider Magnolia Oil & Gas Corporation's (NYSE:MGY) CEO Compensation Package?

Key Insights

• Magnolia Oil & Gas' Annual General Meeting to take place on 7th of May
• CEO Chris Stavros' total compensation includes salary of US$826.5k
• Total compensation is similar to the industry average
• Magnolia Oil & Gas' EPS declined by 6.9% over the past three years while total shareholder loss over the past three years was 7.3%

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Shareholders will probably not be too impressed with the underwhelming results at Magnolia Oil & Gas Corporation (NYSE:MGY) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 7th of May. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.

View our latest analysis for Magnolia Oil & Gas

Comparing Magnolia Oil & Gas Corporation's CEO Compensation With The Industry

Our data indicates that Magnolia Oil & Gas Corporation has a market capitalization of US$4.2b, and total annual CEO compensation was reported as US$8.4m for the year to December 2024. That's a notable increase of 53% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$827k.

For comparison, other companies in the American Oil and Gas industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$8.1m. This suggests that Magnolia Oil & Gas remunerates its CEO largely in line with the industry average. Moreover, Chris Stavros also holds US$14m worth of Magnolia Oil & Gas stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, around 14% of total compensation represents salary and 86% is other remuneration. Magnolia Oil & Gas sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at Magnolia Oil & Gas Corporation's Growth Numbers

Over the last three years, Magnolia Oil & Gas Corporation has shrunk its earnings per share by 6.9% per year. In the last year, its revenue is up 7.2%.

The decline in EPS is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Magnolia Oil & Gas Corporation Been A Good Investment?

Given the total shareholder loss of 7.3% over three years, many shareholders in Magnolia Oil & Gas Corporation are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

So you may want to check if insiders are buying Magnolia Oil & Gas shares with their own money (free access).

Switching gears from Magnolia Oil & Gas, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.