Julian Segal has been the CEO of Caltex Australia Limited (ASX:CTX) since 2009. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we’ll look at a snap shot of the business growth. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Julian Segal’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Caltex Australia Limited has a market cap of AU$6.3b, and is paying total annual CEO compensation of AU$5.2m. (This number is for the twelve months until December 2018). While we always look at total compensation first, we note that the salary component is less, at AU$2.3m. We looked at a group of companies with market capitalizations from AU$2.8b to AU$9.1b, and the median CEO total compensation was AU$3.4m.
Thus we can conclude that Julian Segal receives more in total compensation than the median of a group of companies in the same market, and of similar size to Caltex Australia Limited. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at Caltex Australia has changed over time.
Is Caltex Australia Limited Growing?
Over the last three years Caltex Australia Limited has grown its earnings per share (EPS) by an average of 11% per year (using a line of best fit). Its revenue is up 33% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. It could be important to check this free visual depiction of what analysts expect for the future.
Has Caltex Australia Limited Been A Good Investment?
Since shareholders would have lost about 11% over three years, some Caltex Australia Limited shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
We examined the amount Caltex Australia Limited pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation.
Extracted from Yahoo Finance