Shareholders will probably not be too impressed with the underwhelming results at Western Energy Services Corp. (TSE:WRG) recently. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 27 April 2021. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. The data we present below explains why we think CEO compensation is not consistent with recent performance.
How Does Total Compensation For Alex R. MacAusland Compare With Other Companies In The Industry?
Our data indicates that Western Energy Services Corp. has a market capitalization of CA$42m, and total annual CEO compensation was reported as CA$916k for the year to December 2020. This means that the compensation hasn’t changed much from last year. We note that the salary of CA$525.0k makes up a sizeable portion of the total compensation received by the CEO.
On comparing similar-sized companies in the industry with market capitalizations below CA$252m, we found that the median total CEO compensation was CA$720k. This suggests that Western Energy Services remunerates its CEO largely in line with the industry average. What’s more, Alex R. MacAusland holds CA$903k worth of shares in the company in their own name.
Speaking on an industry level, nearly 35% of total compensation represents salary, while the remainder of 65% is other remuneration. According to our research, Western Energy Services 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 Western Energy Services Corp.’s Growth Numbers
Over the last three years, Western Energy Services Corp. has shrunk its earnings per share by 25% per year. Its revenue is down 47% over the previous year.
The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration
Has Western Energy Services Corp. Been A Good Investment?
With a total shareholder return of -55% over three years, Western Energy Services Corp. shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.
Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there’s little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management’s plans and strategies to turn performance around and reassess their investment thesis in regards to the company.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well.
Important note: Western Energy Services 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.