Pieridae Energy Limited's (TSE:PEA) CEO Compensation Is Looking A Bit Stretched At The Moment

Shareholders of Pieridae Energy Limited (TSE:PEA) will have been dismayed by the negative share price return over the last three years. In addition, the company's per-share earnings growth is not looking good, despite growing revenues. Shareholders will have a chance to take their concerns to the board at the next AGM on 27 May 2021 and vote on resolutions including executive compensation, which studies show may have an impact on company performance. We think shareholders may be cautious of approving a pay rise for the CEO at the moment, based on our analysis below.

View our latest analysis for Pieridae Energy

Comparing Pieridae Energy Limited's CEO Compensation With the industry

At the time of writing, our data shows that Pieridae Energy Limited has a market capitalization of CA$55m, and reported total annual CEO compensation of CA$483k for the year to December 2020. Notably, that's a decrease of 20% over the year before. Notably, the salary which is CA$278.3k, represents a considerable chunk of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under CA$241m, the reported median total CEO compensation was CA$248k. Accordingly, our analysis reveals that Pieridae Energy Limited pays Alfred Sorensen north of the industry median. Furthermore, Alfred Sorensen directly owns CA$3.9m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	CA$278k	CA$300k	58%
Other	CA$205k	CA$301k	42%
Total Compensation	CA$483k	CA$601k	100%

Speaking on an industry level, nearly 62% of total compensation represents salary, while the remainder of 38% is other remuneration. There isn't a significant difference between Pieridae Energy and the broader market, in terms of salary allocation in the overall compensation package. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

Pieridae Energy Limited's Growth

Over the last three years, Pieridae Energy Limited has shrunk its earnings per share by 12% per year. In the last year, its revenue is up 70%.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. It's hard to reach a conclusion about business performance right now. This may be one to watch. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Pieridae Energy Limited Been A Good Investment?

The return of -93% over three years would not have pleased Pieridae Energy Limited shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 5 warning signs (and 2 which make us uncomfortable) in Pieridae Energy we think you should know about.

Important note: Pieridae 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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