Should You Worry About Precision Drilling Corporation’s (TSE:PD) CEO Pay Cheque?

In 2007 Kevin Neveu was appointed CEO of Precision Drilling Corporation (TSE:PD). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Precision Drilling

How Does Kevin Neveu’s Compensation Compare With Similar Sized Companies?

Our data indicates that Precision Drilling Corporation is worth CA$784m, and total annual CEO compensation is CA$6.2m. (This is based on the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at CA$976k. When we examined a selection of companies with market caps ranging from CA$268m to CA$1.1b, we found the median CEO compensation was CA$1.4m.

It would therefore appear that Precision Drilling Corporation pays Kevin Neveu 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 better assess whether the pay is overly generous by looking into the underlying business performance. So this free report on the analyst consensus forecasts could help you make a master move on this stock.

The graphic below shows how CEO compensation at Precision Drilling has changed from year to year.

TSX:PD CEO Compensation January 10th 19
TSX:PD CEO Compensation January 10th 19

Is Precision Drilling Corporation Growing?

Over the last three years Precision Drilling Corporation has grown its earnings per share (EPS) by an average of 40% per year (using a line of best fit). In the last year, its revenue is up 14%.

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 Precision Drilling Corporation Been A Good Investment?

With a three year total loss of 33%, Precision Drilling Corporation would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

We examined the amount Precision Drilling Corporation pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

However, the earnings per share growth over three years is certainly impressive. On the other hand returns to investors over the same period have probably disappointed many. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Precision Drilling.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.