John Brda has been the CEO of Torchlight Energy Resources, Inc. (NASDAQ:TRCH) since 2014, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Torchlight Energy Resources pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing Torchlight Energy Resources, Inc.'s CEO Compensation With the industry
According to our data, Torchlight Energy Resources, Inc. has a market capitalization of US$27m, and paid its CEO total annual compensation worth US$375k over the year to December 2019. That's mostly flat as compared to the prior year's compensation. Notably, the salary of US$375k is the entirety of the CEO compensation.
For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$675k. In other words, Torchlight Energy Resources pays its CEO lower than the industry median. What's more, John Brda holds US$638k worth of shares in the company in their own name.
Speaking on an industry level, nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. At the company level, Torchlight Energy Resources pays John Brda solely through a salary, preferring to go down a conventional route. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Torchlight Energy Resources, Inc.'s Growth Numbers
Over the last three years, Torchlight Energy Resources, Inc. has shrunk its earnings per share by 46% per year. In the last year, its revenue is down 69%.
Few shareholders would be pleased to read that EPS have declined. 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. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has Torchlight Energy Resources, Inc. Been A Good Investment?
Since shareholders would have lost about 79% over three years, some Torchlight Energy Resources, Inc. investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.
Torchlight Energy Resources pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. As previously discussed, John is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. While we are quite underwhelmed with EPS growth, the shareholder returns over the past three years have also failed to impress us. We can't say the CEO compensation is high, but shareholders will be cold to a bump at this stage, considering negative investor returns.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 5 warning signs (and 2 which are a bit unpleasant) in Torchlight Energy Resources we think you should know about.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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.
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