Is Journey Energy Inc. (TSE:JOY) Overpaying Its CEO?

Alex Verge became the CEO of Journey Energy Inc. (TSE:JOY) in 2012. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Journey Energy

How Does Alex Verge’s Compensation Compare With Similar Sized Companies?

Our data indicates that Journey Energy Inc. is worth CA$87m, and total annual CEO compensation is CA$575k. (This is based on the year to December 2018). While we always look at total compensation first, we note that the salary component is less, at CA$240k. We took a group of companies with market capitalizations below CA$266m, and calculated the median CEO total compensation to be CA$143k.

Thus we can conclude that Alex Verge receives more in total compensation than the median of a group of companies in the same market, and of similar size to Journey Energy Inc.. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see, below, how CEO compensation at Journey Energy has changed over time.

TSX:JOY CEO Compensation, September 2nd 2019
TSX:JOY CEO Compensation, September 2nd 2019

Is Journey Energy Inc. Growing?

Journey Energy Inc. has reduced its earnings per share by an average of 40% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is down -2.4%.

Sadly for shareholders, earnings per share are actually down, over three years. And the fact that revenue is down year on year arguably paints an ugly picture. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration.

Has Journey Energy Inc. Been A Good Investment?

With a total shareholder return of 24% over three years, Journey Energy Inc. shareholders would, in general, 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 Journey Energy Inc., and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years. While shareholder returns are acceptable, they don’t delight. So we doubt many shareholders would consider the CEO pay to be particularly modest! If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Journey Energy.

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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.