How Should Investors React To Vermilion Energy Inc.'s (TSE:VET) CEO Pay?
In 2016 Tony Marino was appointed CEO of Vermilion Energy Inc. (TSE:VET). First, this article will compare CEO compensation with compensation at similar sized companies. 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. This method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for Vermilion Energy
How Does Tony Marino's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Vermilion Energy Inc. has a market cap of CA$805m, and reported total annual CEO compensation of CA$4.9m for the year to December 2019. That's actually a decrease on the year before. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at CA$933k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from CA$283m to CA$1.1b, we found the median CEO total compensation was CA$1.7m.
Next, let's break down remuneration compositions to understand how the industry and company compare with each other. On an industry level, roughly 55% of total compensation represents salary and 45% is other remuneration. Non-salary compensation represents a greater slice of the remuneration pie for Vermilion Energy, in sharp contrast to the overall sector.
Thus we can conclude that Tony Marino receives more in total compensation than the median of a group of companies in the same market, and of similar size to Vermilion Energy Inc.. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance. You can see a visual representation of the CEO compensation at Vermilion Energy, below.
Is Vermilion Energy Inc. Growing?
Over the last three years Vermilion Energy Inc. has seen earnings per share (EPS) move in a positive direction by an average of 78% per year (using a line of best fit). Its revenue is up 15% over last year.
This demonstrates that the company has been improving recently. A good result. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. It could be important to check this free visual depiction of what analysts expect for the future.
Has Vermilion Energy Inc. Been A Good Investment?
Since shareholders would have lost about 87% over three years, some Vermilion Energy Inc. shareholders would surely be feeling negative emotions. 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 Vermilion Energy Inc., 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 we must not forget that the EPS growth has been very strong over three years. However, the returns to investors are far less impressive, over the same period. Considering positive per-share earnings movement, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. Shifting gears from CEO pay for a second, we've spotted 8 warning signs for Vermilion Energy you should be aware of, and 2 of them are significant.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
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.
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