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Is Cardinal Energy Ltd.’s (TSE:CJ) CEO Being Overpaid?

Casey Hall

In 2012 M. Ratushny was appointed CEO of Cardinal Energy Ltd. (TSE:CJ). 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 – 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.

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How Does M. Ratushny’s Compensation Compare With Similar Sized Companies?

Our data indicates that Cardinal Energy Ltd. is worth CA$288m, and total annual CEO compensation is CA$1.8m. (This number is for the twelve months until 2017). We think total compensation is more important but we note that the CEO salary is lower, at CA$295k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of CA$133m to CA$532m. The median total CEO compensation was CA$889k.

It would therefore appear that Cardinal Energy Ltd. pays M. Ratushny 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 get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see a visual representation of the CEO compensation at Cardinal Energy, below.

TSX:CJ CEO Compensation January 22nd 19

Is Cardinal Energy Ltd. Growing?

Over the last three years Cardinal Energy Ltd. has grown its earnings per share (EPS) by an average of 37% per year (using a line of best fit). In the last year, its revenue is up 47%.

This demonstrates that the company has been improving recently. A good result. It’s great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly.

It could be important to check this free visual depiction of what analysts expect for the future.

Has Cardinal Energy Ltd. Been A Good Investment?

Since shareholders would have lost about 50% over three years, some Cardinal Energy Ltd. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

We compared total CEO remuneration at Cardinal Energy Ltd. with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. 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. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Cardinal Energy.

Of course, the past can be informative so you might be interested in considering this analytical visualization showing the company history of earnings and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.