Is Paramount Resources Ltd.’s (TSE:POU) CEO Overpaid Relative To Its Peers?

Jim Riddell has been the CEO of Paramount Resources Ltd. (TSE:POU) since 2015. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. 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.

See our latest analysis for Paramount Resources

How Does Jim Riddell’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Paramount Resources Ltd. has a market cap of CA$1.0b, and is paying total annual CEO compensation of CA$4.3m. (This number is for the twelve months until December 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at CA$403k. We looked at a group of companies with market capitalizations from CA$533m to CA$2.1b, and the median CEO total compensation was CA$1.9m.

Thus we can conclude that Jim Riddell receives more in total compensation than the median of a group of companies in the same market, and of similar size to Paramount Resources Ltd.. 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 Paramount Resources has changed from year to year.

TSX:POU CEO Compensation, March 21st 2019
TSX:POU CEO Compensation, March 21st 2019

Is Paramount Resources Ltd. Growing?

Over the last three years Paramount Resources Ltd. has grown its earnings per share (EPS) by an average of 22% per year (using a line of best fit). Its revenue is up 92% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Shareholders might be interested in this free visualization of analyst forecasts.

Has Paramount Resources Ltd. Been A Good Investment?

Paramount Resources Ltd. has served shareholders reasonably well, with a total return of 11% over three years. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.

In Summary…

We compared total CEO remuneration at Paramount Resources Ltd. with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. We also note that, over the same time frame, shareholder returns haven’t been bad. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn’t call the CEO pay problematic. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Paramount Resources (free visualization of insider trades).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.