Is Greenfields Petroleum Corporation’s (CVE:GNF) CEO Salary Justified?

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John Wilfrid Harkins has been the CEO of Greenfields Petroleum Corporation (CVE:GNF) since 2010. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Greenfields Petroleum

How Does John Wilfrid Harkins’s Compensation Compare With Similar Sized Companies?

According to our data, Greenfields Petroleum Corporation has a market capitalization of CA$16m, and pays its CEO total annual compensation worth US$284k. (This is based on the year to December 2017). Notably, the salary of US$276k is the vast majority of the CEO compensation. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO compensation in that group is US$120k.

It would therefore appear that Greenfields Petroleum Corporation pays John Wilfrid Harkins more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

You can see a visual representation of the CEO compensation at Greenfields Petroleum, below.

TSXV:GNF CEO Compensation, February 22nd 2019
TSXV:GNF CEO Compensation, February 22nd 2019

Is Greenfields Petroleum Corporation Growing?

On average over the last three years, Greenfields Petroleum Corporation has shrunk earnings per share by 5.4% each year (measured with a line of best fit). Its revenue is down -1.3% over last year.

Unfortunately, earnings per share have trended lower over the last three years. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don’t have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Greenfields Petroleum Corporation Been A Good Investment?

With a three year total loss of 74%, Greenfields Petroleum Corporation would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

We examined the amount Greenfields Petroleum Corporation pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

Arguably worse, investors are without a positive return for the last three years. In our opinion the CEO might be paid too generously! Shareholders may want to check for free if Greenfields Petroleum insiders are buying or selling shares.

Important note: Greenfields Petroleum 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.