This article will reflect on the compensation paid to Brian Lavergne who has served as CEO of Storm Resources Ltd. (TSE:SRX) since 2010. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Brian Lavergne Compare With Other Companies In The Industry?
At the time of writing, our data shows that Storm Resources Ltd. has a market capitalization of CA$277m, and reported total annual CEO compensation of CA$501k for the year to December 2019. That's a notable decrease of 20% on last year. In particular, the salary of CA$280.6k, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations ranging from CA$131m to CA$525m, the reported median CEO total compensation was CA$1.3m. Accordingly, Storm Resources pays its CEO under the industry median. What's more, Brian Lavergne holds CA$7.3m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Talking in terms of the industry, salary represented approximately 43% of total compensation out of all the companies we analyzed, while other remuneration made up 57% of the pie. According to our research, Storm Resources has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Storm Resources Ltd.'s Growth Numbers
Over the last three years, Storm Resources Ltd. has shrunk its earnings per share by 54% per year. In the last year, its revenue is down 31%.
Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Storm Resources Ltd. Been A Good Investment?
With a three year total loss of 29% for the shareholders, Storm Resources Ltd. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
As we touched on above, Storm Resources Ltd. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. While we are quite underwhelmed with EPS growth, the shareholder returns over the past three years have also failed to impress us. Although we wouldn’t say CEO compensation is high, it’s tough to foresee shareholders warming up to thoughts of a bump anytime soon.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Storm Resources that you should be aware of before investing.
Important note: Storm Resources is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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