Is Cathedral Energy Services Ltd.’s (TSE:CET) CEO Salary Justified?

In 2013 P. MacFarlane was appointed CEO of Cathedral Energy Services Ltd. (TSE:CET). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Cathedral Energy Services

How Does P. MacFarlane’s Compensation Compare With Similar Sized Companies?

According to our data, Cathedral Energy Services Ltd. has a market capitalization of CA$35m, and pays its CEO total annual compensation worth CA$422k. (This number is for the twelve months until December 2017). We think total compensation is more important but we note that the CEO salary is lower, at CA$283k. We examined a group of similar sized companies, with market capitalizations of below CA$267m. The median CEO total compensation in that group is CA$145k.

It would therefore appear that Cathedral Energy Services Ltd. pays P. MacFarlane 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 better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at Cathedral Energy Services has changed from year to year.

TSX:CET CEO Compensation, March 14th 2019
TSX:CET CEO Compensation, March 14th 2019

Is Cathedral Energy Services Ltd. Growing?

On average over the last three years, Cathedral Energy Services Ltd. has grown earnings per share (EPS) by 61% each year (using a line of best fit). It achieved revenue growth of 9.3% over the last year.

This demonstrates that the company has been improving recently. A good result. It’s nice to see a little revenue growth, as this is consistent with healthy business conditions. It could be important to check this free visual depiction of what analysts expect for the future.

Has Cathedral Energy Services Ltd. Been A Good Investment?

Cathedral Energy Services Ltd. has generated a total shareholder return of 32% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary…

We compared the total CEO remuneration paid by Cathedral Energy Services Ltd., and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. We also think investors are doing ok, over the same time period. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn’t call the CEO pay problematic. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Cathedral Energy Services (free visualization of insider trades).

If you want to buy a stock that is better than Cathedral Energy Services, 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.