In 2013 Lee Tillman was appointed CEO of Marathon Oil Corporation (NYSE:MRO). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Lee Tillman's Compensation Compare With Similar Sized Companies?
According to our data, Marathon Oil Corporation has a market capitalization of US$9.0b, and paid its CEO total annual compensation worth US$12m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.1m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from US$4.0b to US$12b, we found the median CEO total compensation was US$6.8m.
It would therefore appear that Marathon Oil Corporation pays Lee Tillman more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see, below, how CEO compensation at Marathon Oil has changed over time.
Is Marathon Oil Corporation Growing?
On average over the last three years, Marathon Oil Corporation has grown earnings per share (EPS) by 98% each year (using a line of best fit). Its revenue is down 1.3% over last year.
This demonstrates that the company has been improving recently. A good result. While it would be good to see revenue growth, profits matter more in the end. You might want to check this free visual report on analyst forecasts for future earnings.
Has Marathon Oil Corporation Been A Good Investment?
Given the total loss of 22% over three years, many shareholders in Marathon Oil Corporation are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared the total CEO remuneration paid by Marathon Oil Corporation, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
However we must not forget that the EPS growth has been very strong over three years. On the other hand returns to investors over the same period have probably disappointed many. Considering the per share profit growth, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. So you may want to check if insiders are buying Marathon Oil shares with their own money (free access).
Important note: Marathon Oil may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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