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Why Falcon Oil & Gas Ltd.'s (CVE:FO) CEO Pay Matters To You

Simply Wall St

Philip O'Quigley became the CEO of Falcon Oil & Gas Ltd. (CVE:FO) in 2012. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. 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.

See our latest analysis for Falcon Oil & Gas

How Does Philip O'Quigley's Compensation Compare With Similar Sized Companies?

According to our data, Falcon Oil & Gas Ltd. has a market capitalization of CA$196m, and paid its CEO total annual compensation worth US$685k over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$420k. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO total compensation in that group is US$157k.

As you can see, Philip O'Quigley is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Falcon Oil & Gas Ltd. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at Falcon Oil & Gas has changed from year to year.

TSXV:FO CEO Compensation, February 29th 2020

Is Falcon Oil & Gas Ltd. Growing?

Falcon Oil & Gas Ltd. has increased its earnings per share (EPS) by an average of 35% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 433%.

This shows that the company has improved itself over the last few years. Good news for shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Falcon Oil & Gas Ltd. Been A Good Investment?

Since shareholders would have lost about 17% over three years, some Falcon Oil & Gas Ltd. shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We compared total CEO remuneration at Falcon Oil & Gas Ltd. with the amount paid at companies with a similar market capitalization. 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. However, the returns to investors are far less impressive, over the same period. Considering the per share profit growth, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. So you may want to check if insiders are buying Falcon Oil & Gas shares with their own money (free access).

Important note: Falcon Oil & Gas may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.