Here's Why Cloud Nine Web3 Technologies Inc.'s (CSE:CNI) CEO Compensation Is The Least Of Shareholders Concerns

By
Simply Wall St
Published
September 08, 2021
CNSX:CNI
Source: Shutterstock

Performance at Cloud Nine Web3 Technologies Inc. (CSE:CNI) has been rather uninspiring recently and shareholders may be wondering how CEO Al Larmour plans to fix this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 14 September 2021. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. In our opinion, CEO compensation does not look excessive and we discuss why.

See our latest analysis for Cloud Nine Web3 Technologies

How Does Total Compensation For Al Larmour Compare With Other Companies In The Industry?

At the time of writing, our data shows that Cloud Nine Web3 Technologies Inc. has a market capitalization of CA$27m, and reported total annual CEO compensation of CA$65k for the year to September 2020. Notably, that's a decrease of 46% over the year before. We note that the salary portion, which stands at CA$60.0k constitutes the majority of total compensation received by the CEO.

In comparison with other companies in the industry with market capitalizations under CA$254m, the reported median total CEO compensation was CA$196k. Accordingly, Cloud Nine Web3 Technologies pays its CEO under the industry median. Moreover, Al Larmour also holds CA$233k worth of Cloud Nine Web3 Technologies stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary CA$60k CA$120k 92%
Other CA$4.9k - 8%
Total CompensationCA$65k CA$120k100%

Speaking on an industry level, nearly 79% of total compensation represents salary, while the remainder of 21% is other remuneration. It's interesting to note that Cloud Nine Web3 Technologies pays out a greater portion of remuneration through salary, compared to the industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
CNSX:CNI CEO Compensation September 9th 2021

Cloud Nine Web3 Technologies Inc.'s Growth

Over the last three years, Cloud Nine Web3 Technologies Inc. has shrunk its earnings per share by 37% per year. It has seen most of its revenue evaporate over the past year.

The decline in EPS is a bit concerning. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Cloud Nine Web3 Technologies Inc. Been A Good Investment?

We think that the total shareholder return of 134%, over three years, would leave most Cloud Nine Web3 Technologies Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

To Conclude...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean these strong returns may not continue. Shareholders might want to question the board about these concerns, and revisit their investment thesis for the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 6 warning signs (and 4 which make us uncomfortable) in Cloud Nine Web3 Technologies we think you should know about.

Important note: Cloud Nine Web3 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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