How Is Element Fleet Management's (TSE:EFN) CEO Paid Relative To Peers?

Simply Wall St
December 16, 2020

Jay Forbes has been the CEO of Element Fleet Management Corp. (TSE:EFN) since 2018, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Element Fleet Management pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for Element Fleet Management

Comparing Element Fleet Management Corp.'s CEO Compensation With the industry

According to our data, Element Fleet Management Corp. has a market capitalization of CA$5.7b, and paid its CEO total annual compensation worth CA$5.8m over the year to December 2019. Notably, that's an increase of 12% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at CA$1.0m.

In comparison with other companies in the industry with market capitalizations ranging from CA$2.5b to CA$8.1b, the reported median CEO total compensation was CA$2.2m. Hence, we can conclude that Jay Forbes is remunerated higher than the industry median. What's more, Jay Forbes holds CA$5.1m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20192018Proportion (2019)
Salary CA$1.0m CA$467k 17%
Other CA$4.8m CA$4.7m 83%
Total CompensationCA$5.8m CA$5.2m100%

On an industry level, around 76% of total compensation represents salary and 24% is other remuneration. In Element Fleet Management's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

TSX:EFN CEO Compensation December 16th 2020

A Look at Element Fleet Management Corp.'s Growth Numbers

Element Fleet Management Corp. has reduced its earnings per share by 29% a year over the last three years. Its revenue is down 1.5% over the previous year.

Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Element Fleet Management Corp. Been A Good Investment?

Boasting a total shareholder return of 42% over three years, Element Fleet Management Corp. has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

As previously discussed, Jay is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. We're not seeing great strides in EPS, but the company has clearly pleased some investors, given the returns over the last three years. Considering positive investor returns, it would be bold of us to criticize CEO compensation, but shareholders might want to see healthier EPS growth before a raise is given out.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 4 warning signs for Element Fleet Management that investors should look into moving forward.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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This article by Simply Wall St is general in nature. 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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