Shareholders May Not Be So Generous With Earth Alive Clean Technologies Inc.'s (CVE:EAC) CEO Compensation And Here's Why

Shareholders of Earth Alive Clean Technologies Inc. (CVE:EAC) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. The AGM coming up on the 23 June 2021 could be an opportunity for shareholders to bring these concerns to the board's attention. Voting on resolutions such as executive remuneration and other matters could also be a way to influence management. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Check out our latest analysis for Earth Alive Clean Technologies

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

According to our data, Earth Alive Clean Technologies Inc. has a market capitalization of CA$27m, and paid its CEO total annual compensation worth CA$218k over the year to December 2020. We note that's an increase of 24% above last year. Notably, the salary of CA$218k is the entirety of the CEO compensation.

On comparing similar-sized companies in the industry with market capitalizations below CA$243m, we found that the median total CEO compensation was CA$240k. So it looks like Earth Alive Clean Technologies compensates Michael Warren in line with the median for the industry. Moreover, Michael Warren also holds CA$663k worth of Earth Alive Clean Technologies stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	CA$218k	CA$175k	100%
Other	-	-	-
Total Compensation	CA$218k	CA$175k	100%

On an industry level, roughly 74% of total compensation represents salary and 26% is other remuneration. Speaking on a company level, Earth Alive Clean Technologies prefers to tread along a traditional path, disbursing all compensation through a 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 Earth Alive Clean Technologies Inc.'s Growth Numbers

Over the past three years, Earth Alive Clean Technologies Inc. has seen its earnings per share (EPS) grow by 52% per year. It saw its revenue drop 23% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Earth Alive Clean Technologies Inc. Been A Good Investment?

With a total shareholder return of -64% over three years, Earth Alive Clean Technologies Inc. shareholders would by and large be disappointed. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Earth Alive Clean Technologies rewards its CEO solely through a salary, ignoring non-salary benefits completely. Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. A huge lag in share price growth when earnings have grown may indicate there could be other issues that are affecting the company at the moment that the market is focused on. If there are some unknown variables that are influencing the stock's price, surely shareholders would have some concerns. 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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 4 warning signs for Earth Alive Clean Technologies that investors should think about before committing capital to this stock.

Important note: Earth Alive Clean 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.

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This article by Simply Wall St is general in nature. 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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