Ovintiv Inc.'s (NYSE:OVV) CEO Looks Like They Deserve Their Pay Packet

Key Insights

• Ovintiv will host its Annual General Meeting on 2nd of May
• CEO Brendan McCracken's total compensation includes salary of US$1.08m
• The total compensation is similar to the average for the industry
• Ovintiv's total shareholder return over the past three years was 127% while its EPS grew by 99% over the past three years

We have been pretty impressed with the performance at Ovintiv Inc. (NYSE:OVV) recently and CEO Brendan McCracken deserves a mention for their role in it. Shareholders will have this at the front of their minds in the upcoming AGM on 2nd of May. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.

See our latest analysis for Ovintiv

Comparing Ovintiv Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Ovintiv Inc. has a market capitalization of US$14b, and reported total annual CEO compensation of US$12m for the year to December 2023. Notably, that's an increase of 16% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.1m.

On comparing similar companies in the American Oil and Gas industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$15m. From this we gather that Brendan McCracken is paid around the median for CEOs in the industry. Moreover, Brendan McCracken also holds US$9.8m worth of Ovintiv stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2023	2022	Proportion (2023)
Salary	US$1.1m	US$1.0m	9%
Other	US$11m	US$9.1m	91%
Total Compensation	US$12m	US$10m	100%

Talking in terms of the industry, salary represented approximately 13% of total compensation out of all the companies we analyzed, while other remuneration made up 87% of the pie. Ovintiv sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Ovintiv Inc.'s Growth Numbers

Ovintiv Inc.'s earnings per share (EPS) grew 99% per year over the last three years. Its revenue is down 25% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. 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 Ovintiv Inc. Been A Good Investment?

We think that the total shareholder return of 127%, over three years, would leave most Ovintiv Inc. 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.

To Conclude...

Given the company's decent performance, the CEO remuneration policy might not be shareholders' central point of focus in the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We did our research and identified 5 warning signs (and 1 which is significant) in Ovintiv we think you should know about.

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.

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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.