This Is The Reason Why We Think Emera Incorporated's (TSE:EMA) CEO Might Be Underpaid

The solid performance at Emera Incorporated (TSE:EMA) has been impressive and shareholders will probably be pleased to know that CEO Scott Balfour has delivered. This would be kept in mind at the upcoming AGM on 20 May 2021 which will be a chance for them to hear the board review the financial results, discuss future company strategy and vote on resolutions such as executive remuneration and other matters. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

See our latest analysis for Emera

Comparing Emera Incorporated's CEO Compensation With the industry

At the time of writing, our data shows that Emera Incorporated has a market capitalization of CA$14b, and reported total annual CEO compensation of CA$7.8m for the year to December 2020. We note that's an increase of 16% above last year. While we always look at total compensation first, our analysis shows that the salary component is less, at CA$1.0m.

On comparing similar companies in the industry with market capitalizations above CA$9.7b, we found that the median total CEO compensation was CA$13m. In other words, Emera pays its CEO lower than the industry median. Furthermore, Scott Balfour directly owns CA$3.4m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	CA$1.0m	CA$1.0m	13%
Other	CA$6.7m	CA$5.7m	87%
Total Compensation	CA$7.8m	CA$6.7m	100%

On an industry level, roughly 13% of total compensation represents salary and 87% is other remuneration. Although there is a difference in how total compensation is set, Emera more or less reflects the market in terms of setting the salary. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Emera Incorporated's Growth

Over the past three years, Emera Incorporated has seen its earnings per share (EPS) grow by 54% per year. It saw its revenue drop 9.9% 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. 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 Emera Incorporated Been A Good Investment?

Boasting a total shareholder return of 58% over three years, Emera Incorporated has done well by shareholders. 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.

In Summary...

The company's solid performance might have made most shareholders happy, possibly making CEO remuneration the least of the matters to be discussed in the AGM. However, investors will get the chance to engage on key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for Emera you should be aware of, and 1 of them is significant.

Important note: Emera 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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