In 2013 Doug Lawler was appointed CEO of Chesapeake Energy Corporation (NYSE:CHK). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. 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.
How Does Doug Lawler’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Chesapeake Energy Corporation has a market cap of US$3.1b, and is paying total annual CEO compensation of US$15m. That’s less than last year. When we examined a selection of companies with market caps ranging from US$2.0b to US$6.4b, we found the median CEO compensation was US$5m.
Thus we can conclude that Doug Lawler receives more in total compensation than the median of a group of companies in the same market, and of similar size to Chesapeake Energy Corporation. 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 Chesapeake Energy, below.
Is Chesapeake Energy Corporation Growing?
Over the last three years Chesapeake Energy Corporation has grown its earnings per share (EPS) by an average of 108% per year. In the last year, its revenue is up 7.3%.
This demonstrates that the company has been improving recently. A good result. It’s nice to see a little revenue growth, as this is consistent with healthy business conditions.
It could be important to check this free visual depiction of what analysts expect for the future.
Has Chesapeake Energy Corporation Been A Good Investment?
Given the total loss of 54% over three years, many shareholders in Chesapeake Energy Corporation are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
We examined the amount Chesapeake Energy Corporation pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. Having said that, shareholders may be disappointed with the weak returns over the last three years. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling Chesapeake Energy Corporation shares (free trial).
Or you could feast your eyes on this interactive graph depicting past earnings, cash flow and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.