Is Cameco Corporation (TSE:CCO) Overpaying Its CEO?

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Tim Gitzel has been the CEO of Cameco Corporation (TSE:CCO) since 2011. First, this article will compare CEO compensation with compensation at similar sized companies. 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.

See our latest analysis for Cameco

How Does Tim Gitzel’s Compensation Compare With Similar Sized Companies?

According to our data, Cameco Corporation has a market capitalization of CA$5.4b, and pays its CEO total annual compensation worth CA$6.8m. (This figure is for the year to December 2018). That’s a notable increase of 8.1% on last year. While we always look at total compensation first, we note that the salary component is less, at CA$1.0m. When we examined a selection of companies with market caps ranging from CA$2.7b to CA$8.6b, we found the median CEO total compensation was CA$4.1m.

It would therefore appear that Cameco Corporation pays Tim Gitzel more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see, below, how CEO compensation at Cameco has changed over time.

TSX:CCO CEO Compensation, June 7th 2019
TSX:CCO CEO Compensation, June 7th 2019

Is Cameco Corporation Growing?

On average over the last three years, Cameco Corporation has shrunk earnings per share by 4.0% each year (measured with a line of best fit). It saw its revenue drop -12% over the last year.

Unfortunately, earnings per share have trended lower over the last three years. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.

Has Cameco Corporation Been A Good Investment?

With a three year total loss of 5.5%, Cameco Corporation would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

We compared the total CEO remuneration paid by Cameco Corporation, and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

We think many shareholders would be underwhelmed with the business growth over the last three years.

Arguably worse, investors are without a positive return for the last three years. And we’d be remiss not to note that the CEO remuneration has increased on last year. In our opinion the CEO might be paid too generously! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Cameco.

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.

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.

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. Thank you for reading.