Does Cimarex Energy Co.’s (NYSE:XEC) CEO Pay Reflect Performance?
Tom Jorden became the CEO of Cimarex Energy Co. (NYSE:XEC) in 2011. 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. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
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How Does Tom Jorden’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Cimarex Energy Co. has a market cap of US$6.2b, and is paying total annual CEO compensation of US$11m. (This is based on the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$960k. We looked at a group of companies with market capitalizations from US$4.0b to US$12b, and the median CEO compensation was US$7.0m.
It would therefore appear that Cimarex Energy Co. pays Tom Jorden 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 Cimarex Energy has changed over time.
Is Cimarex Energy Co. Growing?
Cimarex Energy Co. has increased its earnings per share (EPS) by an average of 114% a year, over the last three years (using a line of best fit). It achieved revenue growth of 30% over the last year.
This demonstrates that the company has been improving recently. A good result. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business.
It could be important to check this free visual depiction of what analysts expect for the future.
Has Cimarex Energy Co. Been A Good Investment?
Since shareholders would have lost about 16% over three years, some Cimarex Energy Co. 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 Cimarex Energy Co. 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, the earnings per share growth over three years is certainly impressive. On the other hand returns to investors over the same period have probably disappointed many. Considering the per share profit growth, but keeping in mind the weak returns, we’d need more time to form a view on CEO compensation. So you may want to check if insiders are buying Cimarex Energy shares with their own money (free access).
Or you could feast your eyes on this interactive graph depicting past earnings, cash flow 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.
