Is H2O Innovation Inc. (CVE:HEO) Overpaying Its CEO?
In 2008 Frederic Dugre was appointed CEO of H2O Innovation Inc. (CVE:HEO). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
View our latest analysis for H2O Innovation
How Does Frederic Dugre's Compensation Compare With Similar Sized Companies?
Our data indicates that H2O Innovation Inc. is worth CA$67m, and total annual CEO compensation is CA$332k. (This is based on the year to June 2018). We think total compensation is more important but we note that the CEO salary is lower, at CA$315k. We examined a group of similar sized companies, with market capitalizations of below CA$266m. The median CEO total compensation in that group is CA$137k.
As you can see, Frederic Dugre is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean H2O Innovation Inc. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see a visual representation of the CEO compensation at H2O Innovation, below.
Is H2O Innovation Inc. Growing?
On average over the last three years, H2O Innovation Inc. has shrunk earnings per share by 23% each year (measured with a line of best fit). It achieved revenue growth of 12% over the last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. It could be important to check this free visual depiction of what analysts expect for the future.
Has H2O Innovation Inc. Been A Good Investment?
Given the total loss of 25% over three years, many shareholders in H2O Innovation Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
We compared the total CEO remuneration paid by H2O Innovation Inc., and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.
Arguably worse, investors are without a positive return for the last three years. In our opinion the CEO might be paid too generously! Whatever your view on compensation, you might want to check if insiders are buying or selling H2O Innovation shares (free trial).
Important note: H2O Innovation 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.
