Most Shareholders Will Probably Find That The Compensation For Stampede Drilling Inc.'s (CVE:SDI) CEO Is Reasonable

Performance at Stampede Drilling Inc. (CVE:SDI) has been rather uninspiring recently and shareholders may be wondering how CEO Lyle Whitmarsh plans to fix this. At the next AGM coming up on 18 May 2021, they can influence managerial decision making through voting on resolutions, including executive remuneration. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. In our opinion, CEO compensation does not look excessive and we discuss why.

View our latest analysis for Stampede Drilling

How Does Total Compensation For Lyle Whitmarsh Compare With Other Companies In The Industry?

At the time of writing, our data shows that Stampede Drilling Inc. has a market capitalization of CA$25m, and reported total annual CEO compensation of CA$387k for the year to December 2020. Notably, that's a decrease of 22% over the year before. In particular, the salary of CA$291.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under CA$242m, the reported median total CEO compensation was CA$613k. Accordingly, Stampede Drilling pays its CEO under the industry median. Moreover, Lyle Whitmarsh also holds CA$718k worth of Stampede Drilling stock directly under their own name.

Component	2020	2019	Proportion (2020)
Salary	CA$291k	CA$376k	75%
Other	CA$96k	CA$123k	25%
Total Compensation	CA$387k	CA$499k	100%

On an industry level, around 39% of total compensation represents salary and 61% is other remuneration. It's interesting to note that Stampede Drilling pays out a greater portion of remuneration through salary, compared to the industry. 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.

Stampede Drilling Inc.'s Growth

Stampede Drilling Inc.'s earnings per share (EPS) grew 88% per year over the last three years. Its revenue is down 39% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Stampede Drilling Inc. Been A Good Investment?

The return of -46% over three years would not have pleased Stampede Drilling Inc. shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

The fact that shareholders are sitting on a loss is certainly disheartening. The share price trend has diverged with the robust growth in EPS however, suggesting there may be other factors that could be driving the price performance. A key question may be why the fundamentals have not yet been reflected into the share price. The upcoming AGM will provide shareholders the opportunity to raise their concerns and evaluate if the board’s judgement and decision-making is aligned with their expectations.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Stampede Drilling that investors should look into moving forward.

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.

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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. 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.
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