Should Shareholders Reconsider Orogen Royalties Inc.'s (CVE:OGN) CEO Compensation Package?

The results at Orogen Royalties Inc. (CVE:OGN) have been quite disappointing recently and CEO Paddy Nicol bears some responsibility for this. At the upcoming AGM on 25 October 2021, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Orogen Royalties

How Does Total Compensation For Paddy Nicol Compare With Other Companies In The Industry?

Our data indicates that Orogen Royalties Inc. has a market capitalization of CA$61m, and total annual CEO compensation was reported as CA$268k for the year to December 2020. That's a notable decrease of 8.3% on last year. We note that the salary portion, which stands at CA$231.0k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under CA$247m, the reported median total CEO compensation was CA$162k. Hence, we can conclude that Paddy Nicol is remunerated higher than the industry median. Furthermore, Paddy Nicol directly owns CA$516k worth of shares in the company.

Component	2020	2019	Proportion (2020)
Salary	CA$231k	CA$240k	86%
Other	CA$37k	CA$53k	14%
Total Compensation	CA$268k	CA$293k	100%

Talking in terms of the industry, salary represented approximately 85% of total compensation out of all the companies we analyzed, while other remuneration made up 15% of the pie. Our data reveals that Orogen Royalties allocates salary more or less in line with the wider market. 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.

Orogen Royalties Inc.'s Growth

Orogen Royalties Inc. has reduced its earnings per share by 93% a year over the last three years. In the last year, its revenue is down 85%.

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. These factors suggest that the business performance wouldn't really justify a high pay packet 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 Orogen Royalties Inc. Been A Good Investment?

Few Orogen Royalties Inc. shareholders would feel satisfied with the return of -75% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 4 warning signs for Orogen Royalties (of which 2 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

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.

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.

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