Is Surge Energy Inc.’s (TSE:SGY) CEO Pay Justified?

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Paul Colborne has been the CEO of Surge Energy Inc. (TSE:SGY) since 2013. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Surge Energy

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

At the time of writing our data says that Surge Energy Inc. has a market cap of CA$405m, and is paying total annual CEO compensation of CA$2.1m. (This is based on the year to December 2018). That’s below the compensation, last year. We think total compensation is more important but we note that the CEO salary is lower, at CA$415k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of CA$268m to CA$1.1b. The median total CEO compensation was CA$1.4m.

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.

You can see a visual representation of the CEO compensation at Surge Energy, below.

TSX:SGY CEO Compensation, June 7th 2019
TSX:SGY CEO Compensation, June 7th 2019

Is Surge Energy Inc. Growing?

Surge Energy Inc. has increased its earnings per share (EPS) by an average of 47% a year, over the last three years (using a line of best fit). It achieved revenue growth of 29% over the 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. It could be important to check this free visual depiction of what analysts expect for the future.

Has Surge Energy Inc. Been A Good Investment?

Given the total loss of 45% over three years, many shareholders in Surge Energy Inc. are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

We compared total CEO remuneration at Surge 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.

However, the earnings per share growth over three years is certainly impressive. On the other hand returns to investors over the same period have probably disappointed many. 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.

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.