Is Husky Energy Inc.’s (TSE:HSE) CEO Pay Fair?

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Rob Peabody has been the CEO of Husky Energy Inc. (TSE:HSE) since 2016. First, this article will compare CEO compensation with compensation at other large companies. 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. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Husky Energy

How Does Rob Peabody’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Husky Energy Inc. has a market cap of CA$13b, and is paying total annual CEO compensation of CA$24m. (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$1.5m. We took a group of companies with market capitalizations over CA$10b, and calculated the median CEO total compensation to be CA$9.1m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).

It would therefore appear that Husky Energy Inc. pays Rob Peabody more than the median CEO remuneration at large companies, 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.

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

TSX:HSE CEO Compensation, July 13th 2019
TSX:HSE CEO Compensation, July 13th 2019

Is Husky Energy Inc. Growing?

On average over the last three years, Husky Energy Inc. has grown earnings per share (EPS) by 94% each year (using a line of best fit). In the last year, its revenue is up 11%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s also good to see decent revenue growth in the last year, suggesting the business is healthy and growing.

Has Husky Energy Inc. Been A Good Investment?

With a three year total loss of 14%, Husky Energy Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

We compared the total CEO remuneration paid by Husky Energy Inc., and compared it to remuneration at a group of other large companies. As discussed above, we discovered that the company pays more than the median of that group.

However we must not forget that the EPS growth has been very strong over three years. However, the returns to investors are far less impressive, over the same period. While EPS is positive, we’d say shareholders would want better returns before the CEO is paid much more. Shareholders may want to check for free if Husky Energy insiders are buying or selling shares.

Important note: Husky Energy may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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.