Here's Why We Think Savaria Corporation's (TSE:SIS) CEO Compensation Looks Fair for the time being

Under the guidance of CEO Marcel Bourassa, Savaria Corporation (TSE:SIS) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 12 May 2021. We present our case of why we think CEO compensation looks fair.

View our latest analysis for Savaria

Comparing Savaria Corporation's CEO Compensation With the industry

At the time of writing, our data shows that Savaria Corporation has a market capitalization of CA$1.2b, and reported total annual CEO compensation of CA$825k for the year to December 2020. We note that's a decrease of 9.3% compared to last year. We note that the salary portion, which stands at CA$550.0k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations ranging from CA$488m to CA$2.0b, the reported median CEO total compensation was CA$1.2m. From this we gather that Marcel Bourassa is paid around the median for CEOs in the industry. Moreover, Marcel Bourassa also holds CA$245m worth of Savaria stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	CA$550k	CA$550k	67%
Other	CA$275k	CA$360k	33%
Total Compensation	CA$825k	CA$910k	100%

On an industry level, around 78% of total compensation represents salary and 22% is other remuneration. It's interesting to note that Savaria allocates a smaller portion of compensation to salary in comparison 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.

A Look at Savaria Corporation's Growth Numbers

Savaria Corporation has seen its earnings per share (EPS) increase by 2.5% a year over the past three years. Its revenue is down 5.3% over the previous year.

We would prefer it if there was revenue growth, but the modest EPS growth gives us some relief. It's hard to reach a conclusion about business performance right now. This may be one to watch. 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 Savaria Corporation Been A Good Investment?

Savaria Corporation has generated a total shareholder return of 26% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 3 warning signs for Savaria that investors should look into moving forward.

Switching gears from Savaria, 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.

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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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