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Is Chesapeake Energy Corporation's (NYSE:CHK) CEO Overpaid Relative To Its Peers?

Simply Wall St

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Doug Lawler became the CEO of Chesapeake Energy Corporation (NYSE:CHK) in 2013. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Chesapeake Energy

How Does Doug Lawler's Compensation Compare With Similar Sized Companies?

Our data indicates that Chesapeake Energy Corporation is worth US$4.2b, and total annual CEO compensation is US$23m. (This number is for the twelve months until December 2018). That's a notable increase of 53% on last year. We think total compensation is more important but we note that the CEO salary is lower, at US$1.3m. We looked at a group of companies with market capitalizations from US$2.0b to US$6.4b, and the median CEO total compensation was US$5.2m.

As you can see, Doug Lawler is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Chesapeake Energy Corporation is paying too much. 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 a visual representation of the CEO compensation at Chesapeake Energy, below.

NYSE:CHK CEO Compensation, May 14th 2019

Is Chesapeake Energy Corporation Growing?

Chesapeake Energy Corporation has increased its earnings per share (EPS) by an average of 128% a year, over the last three years (using a line of best fit). It achieved revenue growth of 6.8% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Shareholders might be interested in this free visualization of analyst forecasts.

Has Chesapeake Energy Corporation Been A Good Investment?

Given the total loss of 38% over three years, many shareholders in Chesapeake Energy Corporation are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We compared total CEO remuneration at Chesapeake Energy Corporation with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that 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. So shareholders might not feel great about the fact that CEO pay increased on last year. 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. Whatever your view on compensation, you might want to check if insiders are buying or selling Chesapeake Energy shares (free trial).

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.