Is Surge Energy Inc.’s (TSE:SGY) CEO Overpaid Relative To Its Peers?

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In 2013 Paul Colborne was appointed CEO of Surge Energy Inc. (TSE:SGY). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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 method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Surge Energy

How Does Paul Colborne’s Compensation Compare With Similar Sized Companies?

According to our data, Surge Energy Inc. has a market capitalization of CA$411m, and pays its CEO total annual compensation worth CA$2.2m. (This is based on the year to 2017). We think total compensation is more important but we note that the CEO salary is lower, at CA$156k. We looked at a group of companies with market capitalizations from CA$263m to CA$1.1b, and the median CEO compensation was CA$1.3m.

As you can see, Paul Colborne is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Surge Energy Inc. is paying too much. 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 Surge Energy has changed from year to year.

TSX:SGY CEO Compensation February 5th 19
TSX:SGY CEO Compensation February 5th 19

Is Surge Energy Inc. Growing?

Surge Energy Inc. has increased its earnings per share (EPS) by an average of 110% a year, over the last three years (using a line of best fit). Its revenue is up 39% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Shareholders might be interested in this free visualization of analyst forecasts.

Has Surge Energy Inc. Been A Good Investment?

Since shareholders would have lost about 32% over three years, some Surge 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 the total CEO remuneration paid by Surge Energy Inc., and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

However we must not forget that the EPS growth has been very strong over three years. However, the returns to investors are far less impressive, over the same period. Considering the per share profit growth, but keeping in mind the weak returns, we’d need more time to form a view on CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Surge Energy (free visualization of insider trades).

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.