Stock Analysis

Here's Why We Think Hillcrest Energy Technologies Ltd.'s (CSE:HEAT) CEO Compensation Looks Fair for the time being

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Despite strong share price growth of 333% for Hillcrest Energy Technologies Ltd. (CSE:HEAT) 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 16 September 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 the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

See our latest analysis for Hillcrest Energy Technologies

How Does Total Compensation For Don Currie Compare With Other Companies In The Industry?

At the time of writing, our data shows that Hillcrest Energy Technologies Ltd. has a market capitalization of CA$58m, and reported total annual CEO compensation of CA$190k for the year to December 2020. We note that's an increase of 69% above last year. It is worth noting that the CEO compensation consists entirely of the salary, worth CA$190k.

On comparing similar-sized companies in the industry with market capitalizations below CA$253m, we found that the median total CEO compensation was CA$235k. This suggests that Hillcrest Energy Technologies remunerates its CEO largely in line with the industry average. Moreover, Don Currie also holds CA$3.6m worth of Hillcrest Energy Technologies stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary CA$190k CA$112k 100%
Other - - -
Total CompensationCA$190k CA$112k100%

Talking in terms of the industry, salary represented approximately 51% of total compensation out of all the companies we analyzed, while other remuneration made up 49% of the pie. On a company level, Hillcrest Energy Technologies prefers to reward its CEO through a salary, opting not to pay Don Currie through non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

CNSX:HEAT CEO Compensation September 10th 2021

Hillcrest Energy Technologies Ltd.'s Growth

Over the last three years, Hillcrest Energy Technologies Ltd. has shrunk its earnings per share by 9.9% per year. Its revenue is up 8.0% over the last year.

Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Hillcrest Energy Technologies Ltd. Been A Good Investment?

We think that the total shareholder return of 333%, over three years, would leave most Hillcrest Energy Technologies Ltd. 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.

In Summary...

Hillcrest Energy Technologies pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. 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.

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 Hillcrest Energy Technologies (of which 3 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.

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. 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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