How Should Investors React To Intra Energy's (ASX:IEC) CEO Pay?
This article will reflect on the compensation paid to Jim Shedd who has served as CEO of Intra Energy Corporation Limited (ASX:IEC) since 2016. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Intra Energy.
Check out our latest analysis for Intra Energy
How Does Total Compensation For Jim Shedd Compare With Other Companies In The Industry?
Our data indicates that Intra Energy Corporation Limited has a market capitalization of AU$3.5m, and total annual CEO compensation was reported as AU$496k for the year to June 2020. Notably, that's an increase of 9.3% over the year before. Notably, the salary of AU$496k is the entirety of the CEO compensation.
On comparing similar-sized companies in the industry with market capitalizations below AU$283m, we found that the median total CEO compensation was AU$355k. Hence, we can conclude that Jim Shedd is remunerated higher than the industry median.
Component | 2020 | 2019 | Proportion (2020) |
Salary | AU$496k | AU$454k | 100% |
Other | - | - | - |
Total Compensation | AU$496k | AU$454k | 100% |
On an industry level, roughly 76% of total compensation represents salary and 24% is other remuneration. On a company level, Intra Energy prefers to reward its CEO through a salary, opting not to pay Jim Shedd through non-salary benefits. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
Intra Energy Corporation Limited's Growth
Over the past three years, Intra Energy Corporation Limited has seen its earnings per share (EPS) grow by 21% per year. In the last year, its revenue is up 9.3%.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Intra Energy Corporation Limited Been A Good Investment?
Intra Energy Corporation Limited has generated a total shareholder return of 13% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
In Summary...
Intra Energy pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As we noted earlier, Intra Energy pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But the company has impressed us with its EPS growth, over three years. Looking at the same time period, we think that the shareholder returns are respectable. While it may be worth researching further, we don't see a problem with the high CEO pay, given the good EPS growth.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 4 warning signs (and 2 which make us uncomfortable) in Intra Energy we think you should know about.
Important note: Intra Energy 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.
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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