This Is Why Pancontinental Resources Corporation's (CVE:PUC) CEO Compensation Looks Appropriate

Despite strong share price growth of 129% for Pancontinental Resources Corporation (CVE:PUC) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 21 June 2021. 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 the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for Pancontinental Resources

Comparing Pancontinental Resources Corporation's CEO Compensation With the industry

Our data indicates that Pancontinental Resources Corporation has a market capitalization of CA$39m, and total annual CEO compensation was reported as CA$161k for the year to December 2020. This means that the compensation hasn't changed much from last year. It is worth noting that the CEO compensation consists entirely of the salary, worth CA$161k.

On comparing similar-sized companies in the industry with market capitalizations below CA$243m, we found that the median total CEO compensation was CA$150k. From this we gather that Thomas Croft is paid around the median for CEOs in the industry. Furthermore, Thomas Croft directly owns CA$585k worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	CA$161k	CA$158k	100%
Other	-	-	-
Total Compensation	CA$161k	CA$158k	100%

On an industry level, roughly 92% of total compensation represents salary and 8% is other remuneration. At the company level, Pancontinental Resources pays Thomas Croft solely through a salary, preferring to go down a conventional route. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Pancontinental Resources Corporation's Growth Numbers

Over the last three years, Pancontinental Resources Corporation has shrunk its earnings per share by 1.4% per year. Its revenue is down 37% over the previous year.

A lack of EPS improvement is not good to see. And the impression is worse when you consider revenue is down year-on-year. 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 Pancontinental Resources Corporation Been A Good Investment?

Boasting a total shareholder return of 129% over three years, Pancontinental Resources Corporation has done well by shareholders. 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.

To Conclude...

Pancontinental Resources 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. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

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 4 warning signs for Pancontinental Resources you should be aware of, and 2 of them shouldn't be ignored.

Switching gears from Pancontinental Resources, 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. 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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