Stock Analysis

Most Shareholders Will Probably Find That The CEO Compensation For Thermal Energy International Inc. (CVE:TMG) Is Reasonable

TSXV:TMG
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Despite strong share price growth of 75% for Thermal Energy International Inc. (CVE:TMG) over the last few years, earnings growth has been disappointing, which suggests something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 23 November 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. 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 Thermal Energy International

Comparing Thermal Energy International Inc.'s CEO Compensation With the industry

According to our data, Thermal Energy International Inc. has a market capitalization of CA$23m, and paid its CEO total annual compensation worth CA$252k over the year to May 2021. We note that's a decrease of 14% compared to last year. Notably, the salary which is CA$229.5k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under CA$250m, the reported median total CEO compensation was CA$243k. So it looks like Thermal Energy International compensates Bill Crossland in line with the median for the industry. Furthermore, Bill Crossland directly owns CA$869k worth of shares in the company, implying that they are deeply invested in the company's success.

Component20212020Proportion (2021)
Salary CA$230k CA$236k 91%
Other CA$23k CA$57k 9%
Total CompensationCA$252k CA$292k100%

On an industry level, roughly 72% of total compensation represents salary and 28% is other remuneration. It's interesting to note that Thermal Energy International pays out a greater portion of remuneration through salary, compared to the 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.

ceo-compensation
TSXV:TMG CEO Compensation November 16th 2021

Thermal Energy International Inc.'s Growth

Over the last three years, Thermal Energy International Inc. has shrunk its earnings per share by 33% per year. It saw its revenue drop 28% over the last year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Thermal Energy International Inc. Been A Good Investment?

We think that the total shareholder return of 75%, over three years, would leave most Thermal Energy International Inc. shareholders smiling. 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.

To Conclude...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean returns may be hard to keep up. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 5 warning signs for Thermal Energy International (of which 1 doesn't sit too well with us!) 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.

Valuation is complex, but we're helping make it simple.

Find out whether Thermal Energy International is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

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.

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