Here's Why We Think Xtract One Technologies Inc.'s (TSE:XTRA) CEO Compensation Looks Fair for the time being

Key Insights

• Xtract One Technologies will host its Annual General Meeting on 14th of November
• Total pay for CEO Peter Evans includes CA$511.7k salary
• The overall pay is comparable to the industry average
• Xtract One Technologies' EPS declined by 21% over the past three years while total shareholder return over the past three years was 15%

Despite positive share price growth of 15% for Xtract One Technologies Inc. (TSE:XTRA) over the last few years, earnings growth has been disappointing, which suggests something is amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 14th of November. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

View our latest analysis for Xtract One Technologies

How Does Total Compensation For Peter Evans Compare With Other Companies In The Industry?

At the time of writing, our data shows that Xtract One Technologies Inc. has a market capitalization of CA$143m, and reported total annual CEO compensation of CA$763k for the year to July 2023. That's a modest increase of 7.5% on the prior year. Notably, the salary which is CA$511.7k, represents most of the total compensation being paid.

For comparison, other companies in the Canadian Aerospace & Defense industry with market capitalizations below CA$275m, reported a median total CEO compensation of CA$763k. From this we gather that Peter Evans is paid around the median for CEOs in the industry. What's more, Peter Evans holds CA$286k worth of shares in the company in their own name.

Component	2023	2022	Proportion (2023)
Salary	CA$512k	CA$273k	67%
Other	CA$251k	CA$436k	33%
Total Compensation	CA$763k	CA$709k	100%

On an industry level, around 51% of total compensation represents salary and 49% is other remuneration. According to our research, Xtract One Technologies has allocated a higher percentage of pay to salary in comparison to the wider 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 Xtract One Technologies Inc.'s Growth Numbers

Xtract One Technologies Inc. has reduced its earnings per share by 21% a year over the last three years. Its revenue is up 14% over the last year.

Few shareholders would be pleased to read that EPS have declined. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Xtract One Technologies Inc. Been A Good Investment?

With a total shareholder return of 15% over three years, Xtract One Technologies Inc. shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 4 warning signs for Xtract One Technologies (of which 2 are a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.