Yahoo Finance How Does Cairn Energy's (LON:CNE) CEO Pay Compare With Company Performance?
This article will reflect on the compensation paid to Simon Thomson who has served as CEO of Cairn Energy PLC (LON:CNE) since 2011. This analysis will also assess whether Cairn Energy pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
View our latest analysis for Cairn Energy
Comparing Cairn Energy PLC's CEO Compensation With the industry
Our data indicates that Cairn Energy PLC has a market capitalization of UK£1.2b, and total annual CEO compensation was reported as UK£1.6m for the year to December 2019. That's a notable decrease of 45% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at UK£764k.
For comparison, other companies in the same industry with market capitalizations ranging between UK£744m and UK£2.4b had a median total CEO compensation of UK£470k. Hence, we can conclude that Simon Thomson is remunerated higher than the industry median. Moreover, Simon Thomson also holds UK£2.9m worth of Cairn Energy stock directly under their own name.
Component | 2019 | 2018 | Proportion (2019) |
Salary | UK£764k | UK£721k | 49% |
Other | UK£790k | UK£2.1m | 51% |
Total Compensation | UK£1.6m | UK£2.8m | 100% |
On an industry level, around 65% of total compensation represents salary and 35% is other remuneration. In Cairn Energy's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader 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 Cairn Energy PLC's Growth Numbers
Over the last three years, Cairn Energy PLC has shrunk its earnings per share by 25% per year. Its revenue is down 4.1% over the previous year.
Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Cairn Energy PLC Been A Good Investment?
Cairn Energy PLC has generated a total shareholder return of 1.2% over three years, so most shareholders wouldn't be too disappointed. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
To Conclude...
As we noted earlier, Cairn Energy pays its CEO higher than the norm for similar-sized companies belonging to the same industry. This doesn't look great when you realize that the company has been suffering from negative EPS growth for the last three years. And while shareholder returns have been respectable, they have hardly been superb. So you may want to delve deeper, because we don't think the amount Simon makes is justifiable.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 1 warning sign for Cairn Energy that investors should look into moving forward.
Switching gears from Cairn Energy, 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.
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.
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