We Think Some Shareholders May Hesitate To Increase EnviroMetal Technologies Inc.'s (CSE:ETI) CEO Compensation

In the past three years, the share price of EnviroMetal Technologies Inc. (CSE:ETI) has struggled to grow and now shareholders are sitting on a loss. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 22 November 2021. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.

See our latest analysis for EnviroMetal Technologies

Comparing EnviroMetal Technologies Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that EnviroMetal Technologies Inc. has a market capitalization of CA$38m, and reported total annual CEO compensation of CA$355k for the year to December 2020. This means that the compensation hasn't changed much from last year. Notably, the salary which is CA$300.0k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under CA$251m, the reported median total CEO compensation was CA$165k. This suggests that Duane Nelson is paid more than the median for the industry. What's more, Duane Nelson holds CA$63k worth of shares in the company in their own name.

Component	2020	2019	Proportion (2020)
Salary	CA$300k	CA$300k	85%
Other	CA$55k	CA$58k	15%
Total Compensation	CA$355k	CA$358k	100%

Speaking on an industry level, nearly 85% of total compensation represents salary, while the remainder of 15% is other remuneration. Although there is a difference in how total compensation is set, EnviroMetal Technologies more or less reflects the market in terms of setting the salary. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at EnviroMetal Technologies Inc.'s Growth Numbers

Over the past three years, EnviroMetal Technologies Inc. has seen its earnings per share (EPS) grow by 2.2% per year. In the last year, its revenue is up 318%.

We like the look of the strong year-on-year improvement in revenue. Combined with modest EPS growth, we get a good impression of the company. So while we'd stop short of saying growth is absolutely outstanding, there are definitely some clear positives! While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has EnviroMetal Technologies Inc. Been A Good Investment?

With a total shareholder return of -52% over three years, EnviroMetal Technologies Inc. shareholders would by and large be disappointed. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The stock's movement is disjointed with the company's earnings growth, which ideally should move in the same direction. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues 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. We identified 6 warning signs for EnviroMetal Technologies (3 don't sit too well with us!) that you should be aware of before investing here.

Important note: EnviroMetal Technologies is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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