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Is Gulf Keystone Petroleum Limited's (LON:GKP) CEO Pay Justified?

Simply Wall St

In 2015 Jón Ferrier was appointed CEO of Gulf Keystone Petroleum Limited (LON:GKP). 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. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Gulf Keystone Petroleum

How Does Jón Ferrier's Compensation Compare With Similar Sized Companies?

Our data indicates that Gulf Keystone Petroleum Limited is worth UK£436m, and total annual CEO compensation was reported as US$973k for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$450k. We looked at a group of companies with market capitalizations from UK£153m to UK£613m, and the median CEO total compensation was UK£663k.

As you can see, Jón Ferrier is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Gulf Keystone Petroleum Limited is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at Gulf Keystone Petroleum has changed from year to year.

LSE:GKP CEO Compensation, January 12th 2020

Is Gulf Keystone Petroleum Limited Growing?

On average over the last three years, Gulf Keystone Petroleum Limited has grown earnings per share (EPS) by 153% each year (using a line of best fit). It achieved revenue growth of 9.4% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. You might want to check this free visual report on analyst forecasts for future earnings.

Has Gulf Keystone Petroleum Limited Been A Good Investment?

Most shareholders would probably be pleased with Gulf Keystone Petroleum Limited for providing a total return of 61% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

We compared the total CEO remuneration paid by Gulf Keystone Petroleum Limited, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

However we must not forget that the EPS growth has been very strong over three years. In addition, shareholders have done well over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. So you may want to check if insiders are buying Gulf Keystone Petroleum shares with their own money (free access).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.