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Is TransAtlantic Petroleum Ltd.'s (NYSEMKT:TAT) CEO Being Overpaid?

Simply Wall St

N. Mitchell has been the CEO of TransAtlantic Petroleum Ltd. (NYSEMKT:TAT) since 2011. First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for TransAtlantic Petroleum

How Does N. Mitchell's Compensation Compare With Similar Sized Companies?

Our data indicates that TransAtlantic Petroleum Ltd. is worth US$31m, and total annual CEO compensation was reported as US$2.4m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$252k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We took a group of companies with market capitalizations below US$200m, and calculated the median CEO total compensation to be US$496k.

As you can see, N. Mitchell is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean TransAtlantic Petroleum Ltd. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see, below, how CEO compensation at TransAtlantic Petroleum has changed over time.

AMEX:TAT CEO Compensation, October 9th 2019

Is TransAtlantic Petroleum Ltd. Growing?

Over the last three years TransAtlantic Petroleum Ltd. has grown its earnings per share (EPS) by an average of 65% per year (using a line of best fit). It achieved revenue growth of 14% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Although we don't have analyst forecasts shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has TransAtlantic Petroleum Ltd. Been A Good Investment?

With a three year total loss of 51%, TransAtlantic Petroleum Ltd. would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We examined the amount TransAtlantic Petroleum Ltd. 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.

However we must not forget that the EPS growth has been very strong over three years. On the other hand returns to investors over the same period have probably disappointed many. Considering the per share profit growth, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling TransAtlantic Petroleum (free visualization of insider trades).

Important note: TransAtlantic Petroleum may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.