Is Granite Oil Corp. (TSE:GXO) Excessively Paying Its CEO?

Mike Kabanuk has been the CEO of Granite Oil Corp. (TSE:GXO) since 2015. 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. 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.

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See our latest analysis for Granite Oil

How Does Mike Kabanuk’s Compensation Compare With Similar Sized Companies?

Our data indicates that Granite Oil Corp. is worth CA$34m, and total annual CEO compensation is CA$225k. (This number is for the twelve months until December 2018). That’s actually a decrease on the year before. Notably, the salary of CA$220k is the vast majority of the CEO compensation. We took a group of companies with market capitalizations below CA$269m, and calculated the median CEO total compensation to be CA$148k.

It would therefore appear that Granite Oil Corp. pays Mike Kabanuk 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.

The graphic below shows how CEO compensation at Granite Oil has changed from year to year.

TSX:GXO CEO Compensation, May 17th 2019
TSX:GXO CEO Compensation, May 17th 2019

Is Granite Oil Corp. Growing?

Granite Oil Corp. has reduced its earnings per share by an average of 124% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is down -15%.

Few shareholders would be pleased to read that earnings per share are lower over three years. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has Granite Oil Corp. Been A Good Investment?

Since shareholders would have lost about 85% over three years, some Granite Oil Corp. shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

We compared the total CEO remuneration paid by Granite Oil Corp., and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

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

Just as bad, share price gains for investors have failed to materialize, over the same period. In our opinion the CEO might be paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling Granite Oil shares (free trial).

If you want to buy a stock that is better than Granite Oil, 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.