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What Can We Make Of PrimeEnergy Resources' (NASDAQ:PNRG) CEO Compensation?

This article will reflect on the compensation paid to Charles Drimal who has served as CEO of PrimeEnergy Resources Corporation (NASDAQ:PNRG) since 1987. This analysis will also assess whether PrimeEnergy Resources pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for PrimeEnergy Resources

Comparing PrimeEnergy Resources Corporation's CEO Compensation With the industry

Our data indicates that PrimeEnergy Resources Corporation has a market capitalization of US$108m, and total annual CEO compensation was reported as US$3.2m for the year to December 2019. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$625k.

On comparing similar-sized companies in the industry with market capitalizations below US$200m, we found that the median total CEO compensation was US$596k. This suggests that Charles Drimal is paid more than the median for the industry. What's more, Charles Drimal holds US$28m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2019

2018

Proportion (2019)

Salary

US$625k

US$541k

20%

Other

US$2.6m

US$2.6m

80%

Total Compensation

US$3.2m

US$3.1m

100%

Talking in terms of the industry, salary represented approximately 16% of total compensation out of all the companies we analyzed, while other remuneration made up 84% of the pie. PrimeEnergy Resources is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

ceo-compensation
ceo-compensation

PrimeEnergy Resources Corporation's Growth

PrimeEnergy Resources Corporation has reduced its earnings per share by 57% a year over the last three years. In the last year, its revenue is down 36%.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has PrimeEnergy Resources Corporation Been A Good Investment?

With a total shareholder return of 7.9% over three years, PrimeEnergy Resources Corporation has done okay by shareholders. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

As previously discussed, Charles is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Unfortunately, EPS has not grown in three years, failing to impress us. And shareholder returns are decent but not great. So you may want to delve deeper, because we don't think the amount Charles makes is justifiable.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 3 warning signs for PrimeEnergy Resources that you should be aware of before investing.

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.

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@simplywallst.com.

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