We Think Some Shareholders May Hesitate To Increase GFL Environmental Inc.'s (TSE:GFL) CEO Compensation

Key Insights

• GFL Environmental's Annual General Meeting to take place on 14th of May
• CEO Patrick Dovigi's total compensation includes salary of CA$2.34m
• The overall pay is 379% above the industry average
• GFL Environmental's total shareholder return over the past three years was 92% while its EPS was down 43% over the past three years

Our free stock report includes 1 warning sign investors should be aware of before investing in GFL Environmental. Read for free now.

GFL Environmental Inc. (TSE:GFL) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. Some of these issues will occupy shareholders' minds as the AGM rolls around on 14th of May. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

See our latest analysis for GFL Environmental

How Does Total Compensation For Patrick Dovigi Compare With Other Companies In The Industry?

Our data indicates that GFL Environmental Inc. has a market capitalization of CA$26b, and total annual CEO compensation was reported as CA$67m for the year to December 2024. That is, the compensation was roughly the same as last year. While we always look at total compensation first, our analysis shows that the salary component is less, at CA$2.3m.

For comparison, other companies in the Canadian Commercial Services industry with market capitalizations above CA$11b, reported a median total CEO compensation of CA$14m. This suggests that Patrick Dovigi is paid more than the median for the industry. Furthermore, Patrick Dovigi directly owns CA$885m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2024	2023	Proportion (2024)
Salary	CA$2.3m	CA$2.1m	3%
Other	CA$65m	CA$66m	97%
Total Compensation	CA$67m	CA$68m	100%

Speaking on an industry level, nearly 40% of total compensation represents salary, while the remainder of 60% is other remuneration. GFL Environmental has chosen to walk a path less trodden, opting to compensate its CEO with less of a traditional salary and more non-salary rewards over the last year. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

A Look at GFL Environmental Inc.'s Growth Numbers

Over the last three years, GFL Environmental Inc. has shrunk its earnings per share by 43% per year. Its revenue is up 12% over the last year.

The decline in EPS is a bit concerning. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has GFL Environmental Inc. Been A Good Investment?

Most shareholders would probably be pleased with GFL Environmental Inc. for providing a total return of 92% over three years. 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.

In Summary...

GFL Environmental primarily uses non-salary benefits to reward its CEO. 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 compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for GFL Environmental that investors should think about before committing capital to this 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.

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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.