Here's Why North European Oil Royalty Trust's (NYSE:NRT) CEO Compensation Is The Least Of Shareholders Concerns

The performance at North European Oil Royalty Trust (NYSE:NRT) has been rather lacklustre of late and shareholders may be wondering what CEO John Van Kirk is planning to do about this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 16 February 2022. 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.

Check out our latest analysis for North European Oil Royalty Trust

How Does Total Compensation For John Van Kirk Compare With Other Companies In The Industry?

Our data indicates that North European Oil Royalty Trust has a market capitalization of US$119m, and total annual CEO compensation was reported as US$136k for the year to October 2021. There was no change in the compensation compared to last year. Notably, the salary which is US$132.0k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below US$200m, reported a median total CEO compensation of US$301k. Accordingly, North European Oil Royalty Trust pays its CEO under the industry median. What's more, John Van Kirk holds US$165k worth of shares in the company in their own name.

Component	2021	2020	Proportion (2021)
Salary	US$132k	US$132k	97%
Other	US$4.0k	US$4.0k	3%
Total Compensation	US$136k	US$136k	100%

Talking in terms of the industry, salary represented approximately 21% of total compensation out of all the companies we analyzed, while other remuneration made up 79% of the pie. North European Oil Royalty Trust is focused on going down a more traditional approach and is paying a higher portion of compensation through salary, as compared to non-salary benefits. 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.

North European Oil Royalty Trust's Growth

Over the last three years, North European Oil Royalty Trust has shrunk its earnings per share by 15% per year. In the last year, its revenue is up 14%.

Few shareholders would be pleased to read that EPS have declined. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has North European Oil Royalty Trust Been A Good Investment?

We think that the total shareholder return of 121%, over three years, would leave most North European Oil Royalty Trust shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

North European Oil Royalty Trust pays its CEO a majority of compensation through a salary. While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us wonder if these strong returns can continue. Shareholders might want to question the board about these concerns, and revisit their investment thesis for the company.

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 North European Oil Royalty Trust you should be aware of, and 1 of them makes us a bit uncomfortable.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.