Shareholders May Be A Bit More Conservative With Legend Power Systems Inc.'s (CVE:LPS) CEO Compensation For Now

Key Insights

• Legend Power Systems' Annual General Meeting to take place on 12th of September
• Total pay for CEO Randy Buchamer includes CA$275.0k salary
• The total compensation is similar to the average for the industry
• Over the past three years, Legend Power Systems' EPS grew by 7.2% and over the past three years, the total loss to shareholders 52%

In the past three years, the share price of Legend Power Systems Inc. (CVE:LPS) has struggled to grow and now shareholders are sitting on a loss. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 12th of September. 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.

View our latest analysis for Legend Power Systems

Comparing Legend Power Systems Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Legend Power Systems Inc. has a market capitalization of CA$33m, and reported total annual CEO compensation of CA$285k for the year to September 2023. That's a fairly small increase of 6.0% over the previous year. In particular, the salary of CA$275.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the Canadian Electronic industry with market capitalizations under CA$270m, the reported median total CEO compensation was CA$389k. From this we gather that Randy Buchamer is paid around the median for CEOs in the industry. Furthermore, Randy Buchamer directly owns CA$658k worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	CA$275k	CA$259k	97%
Other	CA$9.6k	CA$9.6k	3%
Total Compensation	CA$285k	CA$268k	100%

On an industry level, around 68% of total compensation represents salary and 32% is other remuneration. Legend Power Systems has gone down a largely traditional route, paying Randy Buchamer a high salary, giving it preference over non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Legend Power Systems Inc.'s Growth Numbers

Legend Power Systems Inc. has seen its earnings per share (EPS) increase by 7.2% a year over the past three years. In the last year, its revenue is down 13%.

We would prefer it if there was revenue growth, but the modest EPS growth gives us some relief. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Legend Power Systems Inc. Been A Good Investment?

Few Legend Power Systems Inc. shareholders would feel satisfied with the return of -52% over three years. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Randy receives almost all of their compensation through a salary. Despite the growth in its earnings, the share price decline in the past three years is certainly concerning. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. 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 did our research and identified 4 warning signs (and 2 which are significant) in Legend Power Systems we think you should know about.

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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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.