Should You Worry About Birchcliff Energy Ltd.'s (TSE:BIR) CEO Salary Level?

In 2004 Jeff Tonken was appointed CEO of Birchcliff Energy Ltd. (TSE:BIR). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Birchcliff Energy

How Does Jeff Tonken's Compensation Compare With Similar Sized Companies?

According to our data, Birchcliff Energy Ltd. has a market capitalization of CA$460m, and paid its CEO total annual compensation worth CA$4.9m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at CA$525k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations from CA$264m to CA$1.1b, and the median CEO total compensation was CA$1.3m.

As you can see, Jeff Tonken is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Birchcliff Energy Ltd. is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see, below, how CEO compensation at Birchcliff Energy has changed over time.

Is Birchcliff Energy Ltd. Growing?

Over the last three years Birchcliff Energy Ltd. has grown its earnings per share (EPS) by an average of 68% per year (using a line of best fit). In the last year, its revenue is down 2.4%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Revenue growth is a real positive for growth, but ultimately profits are more important. Shareholders might be interested in this free visualization of analyst forecasts.

Has Birchcliff Energy Ltd. Been A Good Investment?

With a three year total loss of 74%, Birchcliff Energy Ltd. would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We examined the amount Birchcliff Energy Ltd. pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. On the other hand returns to investors over the same period have probably disappointed many. Considering the per share profit growth, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. So you may want to check if insiders are buying Birchcliff Energy shares with their own money (free access).

If you want to buy a stock that is better than Birchcliff Energy, this free list of high return, low debt companies is a great place to look.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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