Should Shareholders Reconsider Obsidian Energy Ltd.'s (TSE:OBE) CEO Compensation Package?

Key Insights

• Obsidian Energy's Annual General Meeting to take place on 7th of May
• CEO Steve Loukas' total compensation includes salary of CA$525.0k
• The total compensation is 41% higher than the average for the industry
• Over the past three years, Obsidian Energy's EPS fell by 45% and over the past three years, the total loss to shareholders 46%

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Obsidian Energy Ltd. (TSE:OBE) has not performed well recently and CEO Steve Loukas will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 7th of May. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Obsidian Energy

Comparing Obsidian Energy Ltd.'s CEO Compensation With The Industry

At the time of writing, our data shows that Obsidian Energy Ltd. has a market capitalization of CA$449m, and reported total annual CEO compensation of CA$3.0m for the year to December 2024. That's a notable decrease of 9.2% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CA$525k.

On comparing similar companies from the Canadian Oil and Gas industry with market caps ranging from CA$276m to CA$1.1b, we found that the median CEO total compensation was CA$2.1m. Hence, we can conclude that Steve Loukas is remunerated higher than the industry median. Moreover, Steve Loukas also holds CA$5.4m worth of Obsidian Energy stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

On an industry level, roughly 47% of total compensation represents salary and 53% is other remuneration. In Obsidian Energy's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Obsidian Energy Ltd.'s Growth

Over the last three years, Obsidian Energy Ltd. has shrunk its earnings per share by 45% per year. In the last year, its revenue is up 12%.

Few shareholders would be pleased to read that EPS have declined. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Obsidian Energy Ltd. Been A Good Investment?

With a total shareholder return of -46% over three years, Obsidian Energy Ltd. shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

So you may want to check if insiders are buying Obsidian Energy shares with their own money (free access).

Important note: Obsidian Energy is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.