This Is Why We Think Xebec Adsorption Inc.'s (TSE:XBC) CEO Might Get A Pay Rise Approved By Shareholders

By
Simply Wall St
Published
June 04, 2021
TSX:XBC
Source: Shutterstock

Shareholders will be pleased by the robust performance of Xebec Adsorption Inc. (TSE:XBC) recently and this will be kept in mind in the upcoming AGM on 10 June 2021. This would also be a chance for them to hear the board review the financial results, discuss future company strategy to further improve the business and vote on any resolutions such as executive remuneration. Here is our take on why we think CEO compensation is fair and may even warrant a raise.

See our latest analysis for Xebec Adsorption

How Does Total Compensation For Kurt Sorschak Compare With Other Companies In The Industry?

According to our data, Xebec Adsorption Inc. has a market capitalization of CA$729m, and paid its CEO total annual compensation worth CA$416k over the year to December 2020. We note that's a decrease of 30% compared to last year. Notably, the salary which is CA$390.7k, represents most of the total compensation being paid.

For comparison, other companies in the same industry with market capitalizations ranging between CA$485m and CA$1.9b had a median total CEO compensation of CA$985k. Accordingly, Xebec Adsorption pays its CEO under the industry median. Furthermore, Kurt Sorschak directly owns CA$36m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary CA$391k CA$390k 94%
Other CA$25k CA$201k 6%
Total CompensationCA$416k CA$592k100%

Speaking on an industry level, nearly 76% of total compensation represents salary, while the remainder of 24% is other remuneration. Xebec Adsorption pays out 94% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
TSX:XBC CEO Compensation June 4th 2021

Xebec Adsorption Inc.'s Growth

Xebec Adsorption Inc. has reduced its earnings per share by 77% a year over the last three years. In the last year, its revenue is up 24%.

The decrease in EPS could be a concern for some investors. But in contrast the revenue growth is strong, suggesting future potential for EPS growth. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. 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 Xebec Adsorption Inc. Been A Good Investment?

We think that the total shareholder return of 573%, over three years, would leave most Xebec Adsorption Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

The company's overall performance, while not bad, could be better. Assuming the business continues to grow at a good clip, few shareholders would raise any objections to the CEO's remuneration. 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.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 3 warning signs for Xebec Adsorption you should be aware of, and 1 of them is concerning.

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.

If you’re looking to trade a wide range of investments, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted


Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.

Make Confident Investment Decisions

Simply Wall St's Editorial Team provides unbiased, factual reporting on global stocks using in-depth fundamental analysis.
Find out more about our editorial guidelines and team.