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In 2011 Simon Thomson was appointed CEO of Cairn Energy PLC (LON:CNE). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
Check out our latest analysis for Cairn Energy
How Does Simon Thomson's Compensation Compare With Similar Sized Companies?
According to our data, Cairn Energy PLC has a market capitalization of UK£887m, and pays its CEO total annual compensation worth US$2.2m. (This figure is for the year to December 2018). That's below the compensation, last year. We think total compensation is more important but we note that the CEO salary is lower, at US$566k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$400m to US$1.6b. The median total CEO compensation was US$1.1m.
Thus we can conclude that Simon Thomson receives more in total compensation than the median of a group of companies in the same market, and of similar size to Cairn Energy PLC. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Cairn Energy has changed from year to year.
Is Cairn Energy PLC Growing?
Cairn Energy PLC has reduced its earnings per share by an average of 26% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 1132%.
As investors, we are a bit wary of companies that have lower earnings per share, over three years. But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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?
Since shareholders would have lost about 23% over three years, some Cairn Energy PLC shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
We examined the amount Cairn Energy PLC pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.