Lee Tillman has been the CEO of Marathon Oil Corporation (NYSE:MRO) since 2013, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Marathon Oil.
How Does Total Compensation For Lee Tillman Compare With Other Companies In The Industry?
Our data indicates that Marathon Oil Corporation has a market capitalization of US$5.6b, and total annual CEO compensation was reported as US$14m for the year to December 2019. Notably, that's an increase of 15% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.2m.
In comparison with other companies in the industry with market capitalizations ranging from US$4.0b to US$12b, the reported median CEO total compensation was US$6.6m. This suggests that Lee Tillman is paid more than the median for the industry. Moreover, Lee Tillman also holds US$5.0m worth of Marathon Oil 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 16% of total compensation represents salary and 84% is other remuneration. It's interesting to note that Marathon Oil allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Marathon Oil Corporation's Growth Numbers
Over the past three years, Marathon Oil Corporation has seen its earnings per share (EPS) grow by 31% per year. Its revenue is down 33% over the previous year.
Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Marathon Oil Corporation Been A Good Investment?
Since shareholders would have lost about 51% over three years, some Marathon Oil Corporation investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
As we noted earlier, Marathon Oil pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But the company has impressed with its EPS growth, but it's disappointing to see negative shareholder returns over the same period. Considering overall performance, we can't say Lee is underpaid, in fact compensation is definitely on the higher side.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 3 warning signs for Marathon Oil you should be aware of, and 1 of them makes us a bit uncomfortable.
Important note: Marathon Oil is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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.
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