Is PrairieSky Royalty Ltd.’s (TSE:PSK) CEO Being Overpaid?

Andrew Phillips became the CEO of PrairieSky Royalty Ltd. (TSE:PSK) in 2014. 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. 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.

See our latest analysis for PrairieSky Royalty

How Does Andrew Phillips’s Compensation Compare With Similar Sized Companies?

Our data indicates that PrairieSky Royalty Ltd. is worth CA$4.5b, and total annual CEO compensation is CA$4.3m. (This number is for the twelve months until December 2018). That’s a fairly small increase of 6.6% on year before. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at CA$550k. When we examined a selection of companies with market caps ranging from CA$2.7b to CA$8.5b, we found the median CEO total compensation was CA$4.0m.

So Andrew Phillips is paid around the average of the companies we looked at. This doesn’t tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

You can see, below, how CEO compensation at PrairieSky Royalty has changed over time.

TSX:PSK CEO Compensation, April 15th 2019
TSX:PSK CEO Compensation, April 15th 2019

Is PrairieSky Royalty Ltd. Growing?

Over the last three years PrairieSky Royalty Ltd. has grown its earnings per share (EPS) by an average of 31% per year (using a line of best fit). Its revenue is down -6.9% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. The lack of revenue growth isn’t ideal, but it is the bottom line that counts most in business. You might want to check this free visual report on analyst forecasts for future earnings.

Has PrairieSky Royalty Ltd. Been A Good Investment?

Given the total loss of 12% over three years, many shareholders in PrairieSky Royalty Ltd. are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

Remuneration for Andrew Phillips is close enough to the median pay for a CEO of a similar sized company .

We’d say the company can boast of its EPS growth, but it’s disappointing to see negative shareholder returns over three years. Considering the the positives we don’t think the CEO pays is too high, but it’s certainly hard to argue it is too low. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at PrairieSky Royalty.

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.

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.