In 2007 Darren Gee was appointed CEO of Peyto Exploration & Development Corp. (TSE:PEY). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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 Darren Gee's Compensation Compare With Similar Sized Companies?
Our data indicates that Peyto Exploration & Development Corp. is worth CA$292m, and total annual CEO compensation was reported as CA$1.5m for the year to December 2019. That's actually a decrease on the year before. We think total compensation is more important but we note that the CEO salary is lower, at CA$285k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations from CA$141m to CA$564m, and the median CEO total compensation was CA$1.1m.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Talking in terms of the sector, salary represented approximately 58% of total compensation out of all the companies we analysed, while other remuneration made up 42% of the pie. It's interesting to note that Peyto Exploration & Development allocates a smaller portion of compensation to salary in comparison to the broader industry.
As you can see, Darren Gee is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Peyto Exploration & Development Corp. is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business. You can see, below, how CEO compensation at Peyto Exploration & Development has changed over time.
Is Peyto Exploration & Development Corp. Growing?
Peyto Exploration & Development Corp. has seen earnings per share (EPS) move positively by an average of 2.4% a year, over the last three years (using a line of best fit). In the last year, its revenue is down 4.1%.
I would prefer it if there was revenue growth, but the improvement in EPS is good. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. It could be important to check this free visual depiction of what analysts expect for the future.
Has Peyto Exploration & Development Corp. Been A Good Investment?
With a three year total loss of 91%, Peyto Exploration & Development Corp. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
We examined the amount Peyto Exploration & Development Corp. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
Over the last three years, shareholder returns have been downright disappointing, and the underlying business has failed to impress us. Considering this, we have the opinion that the CEO pay is more on the generous side, than the modest side. Taking a breather from CEO compensation, we've spotted 4 warning signs for Peyto Exploration & Development (of which 2 are a bit concerning!) you should know about in order to have a holistic understanding of the stock.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.