Stock Analysis

Callon Petroleum Company's (NYSE:CPE) CEO Compensation Is Looking A Bit Stretched At The Moment

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In the past three years, the share price of Callon Petroleum Company (NYSE:CPE) has struggled to grow and now shareholders are sitting on a loss. Per share earnings growth is also poor, despite revenues growing. The AGM coming up on 14 May 2021 will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. We think shareholders may be cautious of approving a pay rise for the CEO at the moment, based on our analysis below.

Check out our latest analysis for Callon Petroleum

How Does Total Compensation For Joe Gatto Compare With Other Companies In The Industry?

According to our data, Callon Petroleum Company has a market capitalization of US$1.8b, and paid its CEO total annual compensation worth US$6.1m over the year to December 2020. We note that's a decrease of 13% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$774k.

On examining similar-sized companies in the industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$4.1m. Hence, we can conclude that Joe Gatto is remunerated higher than the industry median. Moreover, Joe Gatto also holds US$2.9m worth of Callon Petroleum stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary US$774k US$796k 13%
Other US$5.4m US$6.2m 87%
Total CompensationUS$6.1m US$7.0m100%

Talking in terms of the industry, salary represented approximately 20% of total compensation out of all the companies we analyzed, while other remuneration made up 80% of the pie. It's interesting to note that Callon Petroleum allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

NYSE:CPE CEO Compensation May 7th 2021

Callon Petroleum Company's Growth

Callon Petroleum Company has reduced its earnings per share by 109% a year over the last three years. It achieved revenue growth of 54% over the last year.

The reduction in EPS, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Callon Petroleum Company Been A Good Investment?

With a total shareholder return of -72% over three years, Callon Petroleum Company shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

The returns to shareholders is disappointing along with lack of earnings growth, which goes some way in explaining the poor returns. Shareholders will get the chance at the upcoming AGM to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 3 warning signs for Callon Petroleum that you should be aware of before investing.

Switching gears from Callon Petroleum, 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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