The results at Athabasca Oil Corporation (TSE:ATH) have been quite disappointing recently and CEO Rob Broen bears some responsibility for this. At the upcoming AGM on 05 May 2021, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.
How Does Total Compensation For Rob Broen Compare With Other Companies In The Industry?
At the time of writing, our data shows that Athabasca Oil Corporation has a market capitalization of CA$252m, and reported total annual CEO compensation of CA$4.1m for the year to December 2020. We note that's an increase of 56% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at CA$487k.
For comparison, other companies in the same industry with market capitalizations ranging between CA$124m and CA$495m had a median total CEO compensation of CA$444k. This suggests that Rob Broen is paid more than the median for the industry. What's more, Rob Broen holds CA$1.2m worth of shares in the company in their own name.
Speaking on an industry level, nearly 53% of total compensation represents salary, while the remainder of 47% is other remuneration. It's interesting to note that Athabasca Oil allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Athabasca Oil Corporation's Growth
Over the last three years, Athabasca Oil Corporation has shrunk its earnings per share by 24% per year. Its revenue is down 44% over the previous year.
The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Athabasca Oil Corporation Been A Good Investment?
Few Athabasca Oil Corporation shareholders would feel satisfied with the return of -68% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Athabasca Oil that investors should think about before committing capital to this stock.
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.
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