What Does Gulf Keystone Petroleum's (LON:GKP) CEO Pay Reveal?

Jón Ferrier became the CEO of Gulf Keystone Petroleum Limited (LON:GKP) in 2015, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Gulf Keystone Petroleum.

View our latest analysis for Gulf Keystone Petroleum

How Does Total Compensation For Jón Ferrier Compare With Other Companies In The Industry?

At the time of writing, our data shows that Gulf Keystone Petroleum Limited has a market capitalization of UK£166m, and reported total annual CEO compensation of UK£1.1m for the year to December 2019. That's a notable decrease of 12% on last year. We note that the salary portion, which stands at US$596.0k constitutes the majority of total compensation received by the CEO.

On comparing similar companies from the same industry with market caps ranging from UK£76m to UK£304m, we found that the median CEO total compensation was UK£1.2m. So it looks like Gulf Keystone Petroleum compensates Jón Ferrier in line with the median for the industry.

On an industry level, around 67% of total compensation represents salary and 33% is other remuneration. Gulf Keystone Petroleum sets aside a smaller share of compensation for salary, in comparison to the overall 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.

Gulf Keystone Petroleum Limited's Growth

Over the last three years, Gulf Keystone Petroleum Limited has shrunk its earnings per share by 65% per year. It saw its revenue drop 30% over the last year.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Gulf Keystone Petroleum Limited Been A Good Investment?

With a three year total loss of 17% for the shareholders, Gulf Keystone Petroleum Limited would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

As previously discussed, Jón is compensated close to the median for companies of its size, and which belong to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. It's tough to call out the compensation as inappropriate, but shareholders might not favor a raise before company performance improves.

Shareholders may want to check for free if Gulf Keystone Petroleum insiders are buying or selling shares.

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.

When trading Gulf Keystone Petroleum or any other investment, use the platform considered by many to be the Professional's Gateway to the Worlds Market, Interactive Brokers. You get the lowest-cost* trading on stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.