In 2017 Ed LaFehr was appointed CEO of Baytex Energy Corp. (TSE:BTE). 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.
How Does Ed LaFehr's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Baytex Energy Corp. has a market cap of CA$937m, and reported total annual CEO compensation of CA$3.2m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at CA$575k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. When we examined a selection of companies with market caps ranging from CA$529m to CA$2.1b, we found the median CEO total compensation was CA$2.2m.
As you can see, Ed LaFehr is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Baytex Energy Corp. is paying too much. 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 Baytex Energy has changed from year to year.
Is Baytex Energy Corp. Growing?
On average over the last three years, Baytex Energy Corp. has grown earnings per share (EPS) by 78% each year (using a line of best fit). Its revenue is up 30% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Baytex Energy Corp. Been A Good Investment?
Given the total loss of 68% over three years, many shareholders in Baytex Energy Corp. are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared the total CEO remuneration paid by Baytex Energy Corp., and compared it to remuneration at a group of 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. However, the returns to investors are far less impressive, over the same period. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Baytex Energy.
Important note: Baytex 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.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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.