Shareholders Will Probably Hold Off On Increasing Precision Drilling Corporation's (TSE:PD) CEO Compensation For The Time Being

In the past three years, the share price of Precision Drilling Corporation (TSE:PD) has struggled to grow and now shareholders are sitting on a loss. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 13 May 2021. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

View our latest analysis for Precision Drilling

Comparing Precision Drilling Corporation's CEO Compensation With the industry

Our data indicates that Precision Drilling Corporation has a market capitalization of CA$444m, and total annual CEO compensation was reported as CA$6.1m for the year to December 2020. We note that's a small decrease of 8.0% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CA$957k.

In comparison with other companies in the industry with market capitalizations ranging from CA$244m to CA$976m, the reported median CEO total compensation was CA$1.9m. This suggests that Kevin Neveu is paid more than the median for the industry. What's more, Kevin Neveu holds CA$2.2m worth of shares in the company in their own name.

Component	2020	2019	Proportion (2020)
Salary	CA$957k	CA$1.1m	16%
Other	CA$5.1m	CA$5.6m	84%
Total Compensation	CA$6.1m	CA$6.6m	100%

On an industry level, around 39% of total compensation represents salary and 61% is other remuneration. It's interesting to note that Precision Drilling allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Precision Drilling Corporation's Growth

Over the past three years, Precision Drilling Corporation has seen its earnings per share (EPS) grow by 22% per year. It saw its revenue drop 47% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Precision Drilling Corporation Been A Good Investment?

Few Precision Drilling Corporation shareholders would feel satisfied with the return of -65% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. The upcoming AGM will be a chance for shareholders to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 2 warning signs for Precision Drilling that investors should be aware of in a dynamic business environment.

Important note: Precision Drilling 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. 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.
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