This article will reflect on the compensation paid to Lee Tillman who has served as CEO of Marathon Oil Corporation (NYSE:MRO) since 2013. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Marathon Oil Corporation's CEO Compensation With the industry
Our data indicates that Marathon Oil Corporation has a market capitalization of US$4.5b, and total annual CEO compensation was reported as US$14m for the year to December 2019. That's a notable increase of 15% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.2m.
For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$9.0m. This suggests that Lee Tillman is paid more than the median for the industry. Furthermore, Lee Tillman directly owns US$4.0m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, roughly 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. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Marathon Oil Corporation's Growth
Marathon Oil Corporation's earnings per share (EPS) grew 77% per year over the last three years. In the last year, its revenue is down 28%.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
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 previously discussed, Lee is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. However, we must not forget that the EPS growth has been very strong, but it's disappointing to see negative shareholder returns over the same period. Although we'd stop short of calling it inappropriate, we think Lee is earning a very handsome sum.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Marathon Oil that investors should think about before committing capital to this stock.
Switching gears from Marathon Oil, 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.
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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