Most Shareholders Will Probably Agree With New Stratus Energy Inc.'s (CVE:NSE) CEO Compensation

Key Insights

• New Stratus Energy's Annual General Meeting to take place on 13th of June
• Salary of CA$337.2k is part of CEO Jose Arata's total remuneration
• The overall pay is comparable to the industry average
• Over the past three years, New Stratus Energy's EPS fell by 48% and over the past three years, the total shareholder return was 54%

The share price of New Stratus Energy Inc. (CVE:NSE) has increased significantly over the past few years. However, the earnings growth has not kept up with the share price momentum, suggesting that some other factors may be driving the price direction. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 13th of June. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

See our latest analysis for New Stratus Energy

Comparing New Stratus Energy Inc.'s CEO Compensation With The Industry

According to our data, New Stratus Energy Inc. has a market capitalization of CA$71m, and paid its CEO total annual compensation worth CA$337k over the year to December 2023. That's just a smallish increase of 3.0% on last year. Notably, the salary of CA$337k is the entirety of the CEO compensation.

In comparison with other companies in the Canadian Oil and Gas industry with market capitalizations under CA$274m, the reported median total CEO compensation was CA$275k. This suggests that New Stratus Energy remunerates its CEO largely in line with the industry average. Furthermore, Jose Arata directly owns CA$3.3m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	CA$337k	CA$246k	100%
Other	-	CA$82k	-
Total Compensation	CA$337k	CA$327k	100%

Talking in terms of the industry, salary represented approximately 39% of total compensation out of all the companies we analyzed, while other remuneration made up 61% of the pie. Speaking on a company level, New Stratus Energy prefers to tread along a traditional path, disbursing all compensation through a salary. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

New Stratus Energy Inc.'s Growth

Over the last three years, New Stratus Energy Inc. has shrunk its earnings per share by 48% per year. In the last year, its revenue has collapsed effectively to zero.

Overall this is not a very positive result for shareholders. 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. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has New Stratus Energy Inc. Been A Good Investment?

Most shareholders would probably be pleased with New Stratus Energy Inc. for providing a total return of 54% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

New Stratus Energy rewards its CEO solely through a salary, ignoring non-salary benefits completely. While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 3 warning signs for New Stratus Energy you should be aware of, and 2 of them are concerning.

Switching gears from New Stratus Energy, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.