Is Cequence Energy Ltd’s (TSE:CQE) CEO Overpaid Relative To Its Peers?

Todd Brown has been the CEO of Cequence Energy Ltd (TSE:CQE) since 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Cequence Energy

How Does Todd Brown’s Compensation Compare With Similar Sized Companies?

Our data indicates that Cequence Energy Ltd is worth CA$19m, and total annual CEO compensation is CA$522k. (This number is for the twelve months until 2017). While we always look at total compensation first, we note that the salary component is less, at CA$325k. We examined a group of similar sized companies, with market capitalizations of below CA$264m. The median CEO compensation in that group is CA$155k.

It would therefore appear that Cequence Energy Ltd pays Todd Brown 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.

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

TSX:CQE CEO Compensation December 5th 18
TSX:CQE CEO Compensation December 5th 18

Is Cequence Energy Ltd Growing?

Cequence Energy Ltd has increased its earnings per share (EPS) by an average of 59% a year, over the last three years In the last year, its revenue is down -12%.

This shows that the company has improved itself over the last few years. Good news for shareholders. Revenue growth is a real positive for growth, but ultimately profits are more important.

Although we don’t have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Cequence Energy Ltd Been A Good Investment?

Since shareholders would have lost about 87% over three years, some Cequence 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 compared total CEO remuneration at Cequence Energy Ltd with the amount paid at companies with a similar market capitalization. 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. On the other hand returns to investors over the same period have probably disappointed many. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Cequence Energy (free visualization of insider trades).

Or you might rather take a peek at this analytical visualization of historic cash flow, earnings and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.