Here's Why We Think Bonanza Creek Energy, Inc.'s (NYSE:BCEI) CEO Compensation Looks Fair for the time being
The share price of Bonanza Creek Energy, Inc. (NYSE:BCEI) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 02 June 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.
View our latest analysis for Bonanza Creek Energy
Comparing Bonanza Creek Energy, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Bonanza Creek Energy, Inc. has a market capitalization of US$1.4b, and reported total annual CEO compensation of US$2.3m for the year to December 2020. That's a notable decrease of 15% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$473k.
On comparing similar companies from the same industry with market caps ranging from US$1.0b to US$3.2b, we found that the median CEO total compensation was US$3.1m. From this we gather that Eric Greager is paid around the median for CEOs in the industry. What's more, Eric Greager holds US$3.2m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$473k | US$500k | 21% |
Other | US$1.8m | US$2.2m | 79% |
Total Compensation | US$2.3m | US$2.7m | 100% |
On an industry level, around 20% of total compensation represents salary and 80% is other remuneration. Bonanza Creek Energy is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Bonanza Creek Energy, Inc.'s Growth Numbers
Over the last three years, Bonanza Creek Energy, Inc. has shrunk its earnings per share by 27% per year. Its revenue is down 23% over the previous year.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Bonanza Creek Energy, Inc. Been A Good Investment?
Bonanza Creek Energy, Inc. has generated a total shareholder return of 19% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
In Summary...
While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 6 warning signs for Bonanza Creek Energy (1 makes us a bit uncomfortable!) that you should be aware of before investing here.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
