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Is Callon Petroleum Company's (NYSE:CPE) CEO Pay Justified?

Simply Wall St

Joe Gatto became the CEO of Callon Petroleum Company (NYSE:CPE) in 2017. 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Callon Petroleum

How Does Joe Gatto's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Callon Petroleum Company has a market cap of US$904m, and reported total annual CEO compensation of US$5.6m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$666k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined companies with market caps from US$400m to US$1.6b, and discovered that the median CEO total compensation of that group was US$2.6m.

Thus we can conclude that Joe Gatto receives more in total compensation than the median of a group of companies in the same market, and of similar size to Callon Petroleum Company. However, this doesn't necessarily mean the pay is too high. 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 Callon Petroleum has changed over time.

NYSE:CPE CEO Compensation, November 2nd 2019

Is Callon Petroleum Company Growing?

On average over the last three years, Callon Petroleum Company has grown earnings per share (EPS) by 117% each year (using a line of best fit). In the last year, its revenue is up 37%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. You might want to check this free visual report on analyst forecasts for future earnings.

Has Callon Petroleum Company Been A Good Investment?

Given the total loss of 70% over three years, many shareholders in Callon Petroleum Company are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We examined the amount Callon Petroleum Company pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

However, the earnings per share growth over three years is certainly impressive. Having said that, shareholders may be disappointed with the weak returns over the last three years. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. Shareholders may want to check for free if Callon Petroleum insiders are buying or selling shares.

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.

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.