Is SM Energy Company (NYSE:SM) Overpaying Its CEO?
Jay Ottoson became the CEO of SM Energy Company (NYSE:SM) in 2015. 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. This process should give us an idea about how appropriately the CEO is paid.
View our latest analysis for SM Energy
How Does Jay Ottoson’s Compensation Compare With Similar Sized Companies?
Our data indicates that SM Energy Company is worth US$2.4b, and total annual CEO compensation is US$7.8m. (This is based on the year to 2017). While we always look at total compensation first, we note that the salary component is less, at US$818k. We looked at a group of companies with market capitalizations from US$2.0b to US$6.4b, and the median CEO compensation was US$4.9m.
As you can see, Jay Ottoson is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean SM Energy Company 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.
You can see a visual representation of the CEO compensation at SM Energy, below.
Is SM Energy Company Growing?
On average over the last three years, SM Energy Company has grown earnings per share (EPS) by 55% each year. In the last year, its revenue is up 25%.
This demonstrates that the company has been improving recently. A good result. It’s great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly.
Shareholders might be interested in this free visualization of analyst forecasts. .
Has SM Energy Company Been A Good Investment?
Given the total loss of 11% over three years, many shareholders in SM Energy Company 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 examined the amount SM Energy Company pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
However, the earnings per share growth over three years is certainly impressive. Having said that, shareholders may be disappointed with the weak returns over the last three years. While EPS is positive, we’d say shareholders would want better returns before the CEO is paid much more. Shareholders may want to check for free if SM Energy insiders are buying or selling shares.
Or you might prefer gaze upon this detailed graph of past earnings, revenue and cash flow .
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 editorial-team@simplywallst.com.
