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How Should Investors React To Cameco Corporation's (TSE:CCO) CEO Pay?

Simply Wall St

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In 2011 Tim Gitzel was appointed CEO of Cameco Corporation (TSE:CCO). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. 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.

See our latest analysis for Cameco

How Does Tim Gitzel's Compensation Compare With Similar Sized Companies?

Our data indicates that Cameco Corporation is worth CA$5.5b, and total annual CEO compensation is CA$6.8m. (This number is for the twelve months until December 2018). We note that's an increase of 8.1% above last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at CA$1.0m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of CA$2.7b to CA$8.6b. The median total CEO compensation was CA$4.0m.

It would therefore appear that Cameco Corporation pays Tim Gitzel 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. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see a visual representation of the CEO compensation at Cameco, below.

TSX:CCO CEO Compensation, May 10th 2019

Is Cameco Corporation Growing?

On average over the last three years, Cameco Corporation has shrunk earnings per share by 4.0% each year (measured with a line of best fit). In the last year, its revenue is down -12%.

Sadly for shareholders, earnings per share are actually down, over three years. 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. Shareholders might be interested in this free visualization of analyst forecasts.

Has Cameco Corporation Been A Good Investment?

Given the total loss of 2.2% over three years, many shareholders in Cameco Corporation are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared the total CEO remuneration paid by Cameco Corporation, 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.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

Just as bad, share price gains for investors have failed to materialize, over the same period. Notably, the CEO remuneration is actually up on last year. This analysis suggests to us that the CEO is paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling Cameco shares (free trial).

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

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.