Jess Oram became the CEO of Cauldron Energy Limited (ASX:CXU) in 2018, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Cauldron Energy

How Does Total Compensation For Jess Oram Compare With Other Companies In The Industry?

At the time of writing, our data shows that Cauldron Energy Limited has a market capitalization of AU$20m, and reported total annual CEO compensation of AU$255k for the year to June 2020. That is, the compensation was roughly the same as last year. Notably, the salary which is AU$229.4k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below AU$284m, reported a median total CEO compensation of AU$361k. From this we gather that Jess Oram is paid around the median for CEOs in the industry.

Speaking on an industry level, nearly 73% of total compensation represents salary, while the remainder of 27% is other remuneration. Cauldron Energy is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

Cauldron Energy Limited's Growth

Cauldron Energy Limited has seen its earnings per share (EPS) increase by 66% a year over the past three years. It achieved revenue growth of 443% 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. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Cauldron Energy Limited Been A Good Investment?

We think that the total shareholder return of 59%, over three years, would leave most Cauldron Energy Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude…

As we touched on above, Cauldron Energy Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Investors would surely be happy to see that returns have been great, and that EPS is up. Indeed, many might consider that Jess is compensated rather modestly, given the solid company performance! Stockholders might even be okay with a bump in pay, seeing as how investor returns have been so strong.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 5 warning signs (and 2 which are significant) in Cauldron Energy we think you should know about.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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