This Is The Reason Why We Think Inventronics Limited's (CVE:IVX) CEO Deserves A Bump Up To Their Compensation

By
Simply Wall St
Published
August 11, 2021
TSXV:IVX
Source: Shutterstock

Shareholders will be pleased by the impressive results for Inventronics Limited (CVE:IVX) recently and CEO Dan Stearne has played a key role. At the upcoming AGM on 18 August 2021, they will get a chance to hear the board review the company results, discuss future strategy and cast their vote on any resolutions such as executive remuneration. We think the CEO has done a pretty decent job and probably deserves a well-earned pay rise.

View our latest analysis for Inventronics

How Does Total Compensation For Dan Stearne Compare With Other Companies In The Industry?

At the time of writing, our data shows that Inventronics Limited has a market capitalization of CA$2.0m, and reported total annual CEO compensation of CA$131k for the year to December 2020. This means that the compensation hasn't changed much from last year. In particular, the salary of CA$121.8k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below CA$250m, we found that the median total CEO compensation was CA$493k. In other words, Inventronics pays its CEO lower than the industry median. Furthermore, Dan Stearne directly owns CA$69k worth of shares in the company.

Component20202019Proportion (2020)
Salary CA$122k CA$121k 93%
Other CA$9.0k CA$9.0k 7%
Total CompensationCA$131k CA$130k100%

Speaking on an industry level, nearly 16% of total compensation represents salary, while the remainder of 84% is other remuneration. Inventronics is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
TSXV:IVX CEO Compensation August 12th 2021

A Look at Inventronics Limited's Growth Numbers

Inventronics Limited's earnings per share (EPS) grew 91% per year over the last three years. In the last year, its revenue is up 15%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Inventronics Limited Been A Good Investment?

We think that the total shareholder return of 394%, over three years, would leave most Inventronics Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

To Conclude...

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.

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 4 warning signs for Inventronics you should be aware of, and 1 of them can't be ignored.

Important note: Inventronics is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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