Why We Think StorageVault Canada Inc.'s (CVE:SVI) CEO Compensation Is Not Excessive At All

StorageVault Canada Inc. (CVE:SVI) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 26 May 2021. They will be able to influence managerial decisions through the exercise of their voting power on resolutions, such as CEO remuneration and other matters, which may influence future company prospects. 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 StorageVault Canada

Comparing StorageVault Canada Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that StorageVault Canada Inc. has a market capitalization of CA$1.8b, and reported total annual CEO compensation of CA$2.2m for the year to December 2020. That's a notable increase of 86% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at CA$250k.

On examining similar-sized companies in the industry with market capitalizations between CA$1.2b and CA$3.9b, we discovered that the median CEO total compensation of that group was CA$2.6m. This suggests that StorageVault Canada remunerates its CEO largely in line with the industry average. Moreover, Steven Scott also holds CA$1.7m worth of StorageVault Canada 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$250k	CA$250k	11%
Other	CA$1.9m	CA$924k	89%
Total Compensation	CA$2.2m	CA$1.2m	100%

On an industry level, around 54% of total compensation represents salary and 46% is other remuneration. StorageVault Canada pays a modest slice of remuneration through salary, as compared 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.

StorageVault Canada Inc.'s Growth

Over the last three years, StorageVault Canada Inc. has shrunk its earnings per share by 31% per year. It achieved revenue growth of 13% over the last year.

Overall this is not a very positive result for shareholders. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 StorageVault Canada Inc. Been A Good Investment?

Most shareholders would probably be pleased with StorageVault Canada Inc. for providing a total return of 103% over three years. 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. Shareholders should make the most of the coming opportunity to question the board on key concerns they may have and revisit their investment thesis with regards to the company.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 2 warning signs (and 1 which can't be ignored) in StorageVault Canada we think you should know about.

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. 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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