Why We Think Extendicare Inc.'s (TSE:EXE) CEO Compensation Is Not Excessive At All

By
Simply Wall St
Published
May 20, 2021
TSX:EXE
Source: Shutterstock

Under the guidance of CEO Michael Guerriere, Extendicare Inc. (TSE:EXE) has performed reasonably well recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 27 May 2021. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.

View our latest analysis for Extendicare

How Does Total Compensation For Michael Guerriere Compare With Other Companies In The Industry?

At the time of writing, our data shows that Extendicare Inc. has a market capitalization of CA$716m, and reported total annual CEO compensation of CA$1.7m for the year to December 2020. Notably, that's a decrease of 18% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at CA$600k.

For comparison, other companies in the same industry with market capitalizations ranging between CA$242m and CA$969m had a median total CEO compensation of CA$1.6m. This suggests that Extendicare remunerates its CEO largely in line with the industry average. Furthermore, Michael Guerriere directly owns CA$323k worth of shares in the company.

Component20202019Proportion (2020)
Salary CA$600k CA$600k 35%
Other CA$1.1m CA$1.5m 65%
Total CompensationCA$1.7m CA$2.1m100%

On an industry level, roughly 40% of total compensation represents salary and 60% is other remuneration. In Extendicare'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.

ceo-compensation
TSX:EXE CEO Compensation May 20th 2021

A Look at Extendicare Inc.'s Growth Numbers

Over the past three years, Extendicare Inc. has seen its earnings per share (EPS) grow by 17% per year. It achieved revenue growth of 7.0% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Extendicare Inc. Been A Good Investment?

Extendicare Inc. has served shareholders reasonably well, with a total return of 29% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. Despite the pleasing results, we still think that any proposed increases to CEO compensation will be examined based on a case by case basis and linked to performance outcomes.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for Extendicare you should be aware of, and 2 of them are concerning.

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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