Stock Analysis

We Think Some Shareholders May Hesitate To Increase High Liner Foods Incorporated's (TSE:HLF) CEO Compensation

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Despite strong share price growth of 48% for High Liner Foods Incorporated (TSE:HLF) over the last few years, earnings growth has been disappointing, which suggests something is amiss. The upcoming AGM on 18 May 2021 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 what we gathered, we think shareholders should be wary of raising CEO compensation until the company shows some marked improvement.

See our latest analysis for High Liner Foods

Comparing High Liner Foods Incorporated's CEO Compensation With the industry

According to our data, High Liner Foods Incorporated has a market capitalization of CA$453m, and paid its CEO total annual compensation worth US$2.4m over the year to January 2021. We note that's a decrease of 9.1% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$687k.

On examining similar-sized companies in the industry with market capitalizations between CA$242m and CA$967m, we discovered that the median CEO total compensation of that group was US$698k. Hence, we can conclude that Rod Hepponstall is remunerated higher than the industry median. Furthermore, Rod Hepponstall directly owns CA$1.2m worth of shares in the company.

Component20212019Proportion (2021)
Salary US$687k US$695k 29%
Other US$1.7m US$1.9m 71%
Total CompensationUS$2.4m US$2.6m100%

On an industry level, roughly 59% of total compensation represents salary and 41% is other remuneration. It's interesting to note that High Liner Foods allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

TSX:HLF CEO Compensation May 12th 2021

A Look at High Liner Foods Incorporated's Growth Numbers

Over the last three years, High Liner Foods Incorporated has shrunk its earnings per share by 4.5% per year. In the last year, its revenue is down 12%.

Overall this is not a very positive result for shareholders. 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. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has High Liner Foods Incorporated Been A Good Investment?

We think that the total shareholder return of 48%, over three years, would leave most High Liner Foods Incorporated shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. 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 can have a massive impact on performance, but it's just one element. We did our research and spotted 3 warning signs for High Liner Foods 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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