How Should Investors React To NuVista Energy Ltd.’s (TSE:NVA) CEO Pay?

Jonathan Wright has been the CEO of NuVista Energy Ltd. (TSE:NVA) since 2011. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. 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.

See our latest analysis for NuVista Energy

How Does Jonathan Wright’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that NuVista Energy Ltd. has a market cap of CA$325m, and is paying total annual CEO compensation of CA$2.3m. (This figure is for the year to December 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at CA$455k. We examined companies with market caps from CA$133m to CA$531m, and discovered that the median CEO total compensation of that group was CA$901k.

It would therefore appear that NuVista Energy Ltd. pays Jonathan Wright 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 get a better idea of how generous the pay is by looking at the performance of the underlying business.

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

TSX:NVA CEO Compensation, August 28th 2019
TSX:NVA CEO Compensation, August 28th 2019

Is NuVista Energy Ltd. Growing?

Over the last three years NuVista Energy Ltd. has grown its earnings per share (EPS) by an average of 80% per year (using a line of best fit). Its revenue is up 18% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business.

Has NuVista Energy Ltd. Been A Good Investment?

Since shareholders would have lost about 80% over three years, some NuVista 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 NuVista Energy Ltd. with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

However, the earnings per share growth over three years is certainly impressive. Having said that, shareholders may be disappointed with the weak returns over the last three years. 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. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at NuVista Energy.

Important note: NuVista 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.