Does AKITA Drilling Ltd.'s (TSE:AKT.A) CEO Pay Compare Well With Peers?
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In 2009 Karl Ruud was appointed CEO of AKITA Drilling Ltd. (TSE:AKT.A). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for AKITA Drilling
How Does Karl Ruud's Compensation Compare With Similar Sized Companies?
Our data indicates that AKITA Drilling Ltd. is worth CA$96m, and total annual CEO compensation is CA$1.1m. (This figure is for the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at CA$496k. We examined a group of similar sized companies, with market capitalizations of below CA$262m. The median CEO total compensation in that group is CA$120k.
As you can see, Karl Ruud is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean AKITA Drilling Ltd. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at AKITA Drilling has changed from year to year.
Is AKITA Drilling Ltd. Growing?
On average over the last three years, AKITA Drilling Ltd. has shrunk earnings per share by 12% each year (measured with a line of best fit). It achieved revenue growth of 82% over the last year.
The reduction in earnings per share, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. It could be important to check this free visual depiction of what analysts expect for the future.
Has AKITA Drilling Ltd. Been A Good Investment?
Given the total loss of 68% over three years, many shareholders in AKITA Drilling Ltd. 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 examined the amount AKITA Drilling Ltd. 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.
The growth in the business has been uninspiring, but the shareholder returns have arguably been worse, over the last three years. Although we'd stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling AKITA Drilling (free visualization of insider trades).
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.
