Doug Lawler became the CEO of Chesapeake Energy Corporation (NYSE:CHK) in 2013. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Doug Lawler's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Chesapeake Energy Corporation has a market cap of US$2.6b, and reported total annual CEO compensation of US$23m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$1.3m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We looked at a group of companies with market capitalizations from US$2.0b to US$6.4b, and the median CEO total compensation was US$5.1m.
It would therefore appear that Chesapeake Energy Corporation pays Doug Lawler more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see a visual representation of the CEO compensation at Chesapeake Energy, below.
Is Chesapeake Energy Corporation Growing?
Over the last three years Chesapeake Energy Corporation has grown its earnings per share (EPS) by an average of 133% per year (using a line of best fit). It achieved revenue growth of 8.1% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. Shareholders might be interested in this free visualization of analyst forecasts.
Has Chesapeake Energy Corporation Been A Good Investment?
Since shareholders would have lost about 79% over three years, some Chesapeake Energy Corporation shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.
We compared total CEO remuneration at Chesapeake Energy Corporation with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
However we must not forget that the EPS growth has been very strong over three years. However, the returns to investors are far less impressive, over the same period. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. Shareholders may want to check for free if Chesapeake Energy insiders are buying or selling shares.
If you want to buy a stock that is better than Chesapeake Energy, this free list of high return, low debt companies is a great place to look.
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