Canada Markets open in 3 hrs 51 mins

Is Pine Cliff Energy Ltd.'s (TSE:PNE) CEO Pay Justified?

Simply Wall St

Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!

Phil Hodge has been the CEO of Pine Cliff Energy Ltd. (TSE:PNE) since 2012. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Pine Cliff Energy

How Does Phil Hodge's Compensation Compare With Similar Sized Companies?

Our data indicates that Pine Cliff Energy Ltd. is worth CA$56m, and total annual CEO compensation is CA$468k. (This figure is for the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at CA$300k. We examined a group of similar sized companies, with market capitalizations of below CA$261m. The median CEO total compensation in that group is CA$120k.

It would therefore appear that Pine Cliff Energy Ltd. pays Phil Hodge 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. 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 Pine Cliff Energy has changed over time.

TSX:PNE CEO Compensation, July 18th 2019

Is Pine Cliff Energy Ltd. Growing?

Over the last three years Pine Cliff Energy Ltd. has shrunk its earnings per share by an average of 20% per year (measured with a line of best fit). It saw its revenue drop -6.3% over the last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has Pine Cliff Energy Ltd. Been A Good Investment?

With a three year total loss of 82%, Pine Cliff Energy Ltd. would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We compared total CEO remuneration at Pine Cliff Energy Ltd. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

We think many shareholders would be underwhelmed with the business growth over the last three years.

Just as bad, share price gains for investors have failed to materialize, over the same period. In our opinion the CEO might be paid too generously! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Pine Cliff Energy (free visualization of insider trades).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Thank you for reading.