Why We Think Alvopetro Energy Ltd.'s (CVE:ALV) CEO Compensation Is Not Excessive At All

Key Insights

• Alvopetro Energy to hold its Annual General Meeting on 18th of June
• Salary of US$271.3k is part of CEO Corey Ruttan's total remuneration
• The total compensation is similar to the average for the industry
• Over the past three years, Alvopetro Energy's EPS fell by 2.9% and over the past three years, the total shareholder return was 8.4%

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The share price of Alvopetro Energy Ltd. (CVE:ALV) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. The upcoming AGM on 18th of June may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. 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.

Check out our latest analysis for Alvopetro Energy

Comparing Alvopetro Energy Ltd.'s CEO Compensation With The Industry

Our data indicates that Alvopetro Energy Ltd. has a market capitalization of CA$217m, and total annual CEO compensation was reported as US$982k for the year to December 2024. Notably, that's an increase of 25% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$271k.

For comparison, other companies in the Canadian Oil and Gas industry with market capitalizations ranging between CA$137m and CA$547m had a median total CEO compensation of US$883k. This suggests that Alvopetro Energy remunerates its CEO largely in line with the industry average. What's more, Corey Ruttan holds CA$7.7m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, around 41% of total compensation represents salary and 59% is other remuneration. Alvopetro Energy sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Alvopetro Energy Ltd.'s Growth Numbers

Over the last three years, Alvopetro Energy Ltd. has shrunk its earnings per share by 2.9% per year. In the last year, its revenue is down 13%.

A lack of EPS improvement is not good to see. 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. 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 Alvopetro Energy Ltd. Been A Good Investment?

Alvopetro Energy Ltd. has not done too badly by shareholders, with a total return of 8.4%, over three years. It would be nice to see that metric improve in the future. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.

To Conclude...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about whether these returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

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 2 warning signs for Alvopetro Energy that you should be aware of before investing.

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.