Is Perpetual Energy Inc.'s (TSE:PMT) CEO Paid At A Competitive Rate?

Sue Rose became the CEO of Perpetual Energy Inc. (TSE:PMT) in 2005. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Perpetual Energy

How Does Sue Rose's Compensation Compare With Similar Sized Companies?

Our data indicates that Perpetual Energy Inc. is worth CA$6.9m, and total annual CEO compensation was reported as CA$747k for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at CA$405k. We examined a group of similar sized companies, with market capitalizations of below CA$261m. The median CEO total compensation in that group is CA$216k.

Thus we can conclude that Sue Rose receives more in total compensation than the median of a group of companies in the same market, and of similar size to Perpetual Energy Inc.. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.

The graphic below shows how CEO compensation at Perpetual Energy has changed from year to year.

Is Perpetual Energy Inc. Growing?

Perpetual Energy Inc. has reduced its earnings per share by an average of 92% a year, over the last three years (measured with a line of best fit). It saw its revenue drop 9.9% over the last year.

Unfortunately, earnings per share have trended lower over the last three years. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.

Has Perpetual Energy Inc. Been A Good Investment?

Since shareholders would have lost about 95% over three years, some Perpetual Energy Inc. shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We compared total CEO remuneration at Perpetual Energy Inc. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us. Just as bad, share price gains for investors have failed to materialize, over the same period. This analysis suggests to us that the CEO is paid too generously! Shareholders may want to check for free if Perpetual Energy insiders are buying or selling shares.

Important note: Perpetual 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.

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.

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