Is Cardinal Energy Ltd. (TSE:CJ) Excessively Paying Its CEO?

In 2012 M. Ratushny was appointed CEO of Cardinal Energy Ltd. (TSE:CJ). First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Cardinal Energy

How Does M. Ratushny’s Compensation Compare With Similar Sized Companies?

Our data indicates that Cardinal Energy Ltd. is worth CA$249m, and total annual CEO compensation is CA$1.4m. (This figure is for the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at CA$320k. When we examined a selection of companies with market caps ranging from CA$133m to CA$532m, we found the median CEO total compensation was CA$889k.

It would therefore appear that Cardinal Energy Ltd. pays M. Ratushny 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. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see a visual representation of the CEO compensation at Cardinal Energy, below.

TSX:CJ CEO Compensation, August 20th 2019
TSX:CJ CEO Compensation, August 20th 2019

Is Cardinal Energy Ltd. Growing?

Over the last three years Cardinal Energy Ltd. has grown its earnings per share (EPS) by an average of 83% per year (using a line of best fit). It saw its revenue drop -4.9% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. The lack of revenue growth isn’t ideal, but it is the bottom line that counts most in business.

Has Cardinal Energy Ltd. Been A Good Investment?

Since shareholders would have lost about 71% over three years, some Cardinal Energy Ltd. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

We examined the amount Cardinal Energy Ltd. pays its CEO, and compared it to the amount paid by 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. 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. Whatever your view on compensation, you might want to check if insiders are buying or selling Cardinal Energy shares (free trial).

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.

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.