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We have been pretty impressed with the performance at Element Fleet Management Corp. (TSE:EFN) recently and CEO Jay Forbes deserves a mention for their role in it. Coming up to the next AGM on 12 May 2021, shareholders would be keeping this in mind. It is likely that the focus will be on company strategy going forward as shareholders hear from the board and cast their votes on resolutions such as executive remuneration and other matters. Here is our take on why we think CEO compensation is not extravagant.
Comparing Element Fleet Management Corp.'s CEO Compensation With the industry
At the time of writing, our data shows that Element Fleet Management Corp. has a market capitalization of CA$6.5b, and reported total annual CEO compensation of CA$5.7m for the year to December 2020. That's mostly flat as compared to the prior year's compensation. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CA$1.0m.
In comparison with other companies in the industry with market capitalizations ranging from CA$4.9b to CA$15b, the reported median CEO total compensation was CA$5.1m. So it looks like Element Fleet Management compensates Jay Forbes in line with the median for the industry. Moreover, Jay Forbes also holds CA$6.0m worth of Element Fleet Management stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 48% of total compensation represents salary and 52% is other remuneration. In Element Fleet Management's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Element Fleet Management Corp.'s Growth Numbers
Over the past three years, Element Fleet Management Corp. has seen its earnings per share (EPS) grow by 24% per year. It saw its revenue drop 5.3% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Element Fleet Management Corp. Been A Good Investment?
Boasting a total shareholder return of 230% over three years, Element Fleet Management Corp. has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 3 warning signs for Element Fleet Management that you should be aware of before investing.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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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