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Is Chinook Energy Inc. (TSE:CKE) Overpaying Its CEO?

Simply Wall St

In 2013 Walter Vrataric was appointed CEO of Chinook Energy Inc. (TSE:CKE). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Chinook Energy

How Does Walter Vrataric's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Chinook Energy Inc. has a market cap of CA$12m, and reported total annual CEO compensation of CA$346k for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at CA$257k. We took a group of companies with market capitalizations below CA$265m, and calculated the median CEO total compensation to be CA$205k.

Thus we can conclude that Walter Vrataric receives more in total compensation than the median of a group of companies in the same market, and of similar size to Chinook Energy Inc.. However, this doesn't necessarily mean the pay 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.

The graphic below shows how CEO compensation at Chinook Energy has changed from year to year.

TSX:CKE CEO Compensation, February 18th 2020

Is Chinook Energy Inc. Growing?

Over the last three years Chinook Energy Inc. has grown its earnings per share (EPS) by an average of 4.7% per year (using a line of best fit). It saw its revenue drop 38% over the last year.

I would argue that the lack of revenue growth in the last year is less than ideal, but it is good to see EPS growth. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. It could be important to check this free visual depiction of what analysts expect for the future.

Has Chinook Energy Inc. Been A Good Investment?

Since shareholders would have lost about 87% over three years, some Chinook Energy Inc. shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We examined the amount Chinook Energy Inc. pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

Over the last three years, shareholder returns have been downright disappointing, and the underlying business has failed to impress us. Shareholders may wish to consider further research. Although we don't think the CEO pay is too high, it is probably more on the generous side of things. So you may want to check if insiders are buying Chinook Energy shares with their own money (free access).

Important note: Chinook 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.

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.

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. Thank you for reading.