In 2011 Tim Gitzel was appointed CEO of Cameco Corporation (TSE:CCO). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
How Does Tim Gitzel’s Compensation Compare With Similar Sized Companies?
Our data indicates that Cameco Corporation is worth CA$4.2b, and total annual CEO compensation was reported as CA$6.8m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at CA$1.0m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of CA$2.6b to CA$8.5b. The median total CEO compensation was CA$3.7m.
Thus we can conclude that Tim Gitzel receives more in total compensation than the median of a group of companies in the same market, and of similar size to Cameco Corporation. However, this doesn’t necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Cameco has changed from year to year.
Is Cameco Corporation Growing?
Over the last three years Cameco Corporation has grown its earnings per share (EPS) by an average of 55% per year (using a line of best fit). It saw its revenue drop 12% over the last year.
This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn’t ideal, but it is the bottom line that counts most in business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Cameco Corporation Been A Good Investment?
With a three year total loss of 20%, Cameco Corporation would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
We examined the amount Cameco Corporation 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. 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. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Cameco (free visualization of insider trades).
If you want to buy a stock that is better than Cameco, this free list of high return, low debt companies is a great place to look.
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