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Is Cardinal Energy Ltd.'s (TSE:CJ) CEO Overpaid Relative To Its Peers?

Simply Wall St

In 2012 M. Ratushny was appointed CEO of Cardinal Energy Ltd. (TSE:CJ). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Cardinal Energy

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

Our data indicates that Cardinal Energy Ltd. is worth CA$264m, and total annual CEO compensation is CA$1.4m. (This is based on the year to December 2018). While we always look at total compensation first, we note that the salary component is less, at CA$320k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of CA$131m to CA$523m. The median total CEO compensation was CA$836k.

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. 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 Cardinal Energy has changed over time.

TSX:CJ CEO Compensation, July 22nd 2019

Is Cardinal Energy Ltd. Growing?

On average over the last three years, Cardinal Energy Ltd. has grown earnings per share (EPS) by 71% each year (using a line of best fit). In the last year, its revenue is up 7.9%.

This demonstrates that the company has been improving recently. A good result. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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?

With a three year total loss of 69%, Cardinal Energy Ltd. would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We examined the amount Cardinal Energy Ltd. 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.

However we must not forget that the EPS growth has been very strong over three years. However, the returns to investors are far less impressive, over the same period. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. So you may want to check if insiders are buying Cardinal Energy shares with their own money (free access).

Important note: Cardinal Energy 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.

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.