Yahoo Finance What We Learned About Gulf Keystone Petroleum's (LON:GKP) CEO Compensation
This article will reflect on the compensation paid to Jón Ferrier who has served as CEO of Gulf Keystone Petroleum Limited (LON:GKP) since 2015. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for Gulf Keystone Petroleum
Comparing Gulf Keystone Petroleum Limited's CEO Compensation With the industry
Our data indicates that Gulf Keystone Petroleum Limited has a market capitalization of UK£249m, and total annual CEO compensation was reported as UK£1.1m for the year to December 2019. We note that's a decrease of 12% compared to last year. We note that the salary portion, which stands at US$596.0k constitutes the majority of total compensation received by the CEO.
On comparing similar companies from the same industry with market caps ranging from UK£148m to UK£593m, we found that the median CEO total compensation was UK£1.2m. From this we gather that Jón Ferrier is paid around the median for CEOs in the industry.
Component | 2019 | 2018 | Proportion (2019) |
Salary | UK£596k | UK£574k | 55% |
Other | UK£495k | UK£667k | 45% |
Total Compensation | UK£1.1m | UK£1.2m | 100% |
Speaking on an industry level, nearly 65% of total compensation represents salary, while the remainder of 35% is other remuneration. Gulf Keystone Petroleum pays a modest slice of remuneration through salary, as compared to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
Gulf Keystone Petroleum Limited's Growth
Gulf Keystone Petroleum Limited has reduced its earnings per share by 65% a year over the last three years. In the last year, its revenue is down 30%.
Few shareholders would be pleased to read that EPS have declined. 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. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Gulf Keystone Petroleum Limited Been A Good Investment?
Gulf Keystone Petroleum Limited has served shareholders reasonably well, with a total return of 32% over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.
In Summary...
As previously discussed, Jón is compensated close to the median for companies of its size, and which belong to the same industry. Gulf Keystone Petroleum has had a tough time in recent years, with declining EPS growth, and although shareholder returns are stable, they are hardly worth celebrating. These figures do not go well against CEO compensation, which is more or less equal to the industry median. We wouldn't go as far as saying CEO compensation is inappropriate, but we don't think the executive is underpaid.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 1 warning sign for Gulf Keystone Petroleum that investors should look into moving forward.
Switching gears from Gulf Keystone Petroleum, 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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