Is TORC Oil & Gas Ltd.’s (TSE:TOG) CEO Being Overpaid?

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The CEO of TORC Oil & Gas Ltd. (TSE:TOG) is Brett Herman. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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 TORC Oil & Gas

How Does Brett Herman’s Compensation Compare With Similar Sized Companies?

Our data indicates that TORC Oil & Gas Ltd. is worth CA$916m, and total annual CEO compensation is CA$2.5m. (This figure is for the year to December 2018). Notably, that’s an increase of 23% over the year before. While we always look at total compensation first, we note that the salary component is less, at CA$375k. We looked at a group of companies with market capitalizations from CA$529m to CA$2.1b, and the median CEO total compensation was CA$2.0m.

That means Brett Herman receives fairly typical remuneration for the CEO of a company that size. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.

You can see a visual representation of the CEO compensation at TORC Oil & Gas, below.

TSX:TOG CEO Compensation, June 22nd 2019
TSX:TOG CEO Compensation, June 22nd 2019

Is TORC Oil & Gas Ltd. Growing?

TORC Oil & Gas Ltd. has increased its earnings per share (EPS) by an average of 133% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 35%.

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 TORC Oil & Gas Ltd. Been A Good Investment?

Since shareholders would have lost about 40% over three years, some TORC Oil & Gas Ltd. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

Brett Herman is paid around what is normal the leaders of comparable size companies.

We like that the company is growing EPS, but we find the returns over the last three years to be lacking. Considering the improvement in earnings per share, one could argue that the CEO pay is appropriate, albeit not too low. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling TORC Oil & Gas (free visualization of insider trades).

Important note: TORC Oil & Gas 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.

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.