This Is Why Fortis Inc.'s (TSE:FTS) CEO Compensation Looks Appropriate

Key Insights

• Fortis will host its Annual General Meeting on 8th of May
• Total pay for CEO Dave Hutchens includes CA$1.71m salary
• The total compensation is similar to the average for the industry
• Fortis' EPS grew by 7.0% over the past three years while total shareholder return over the past three years was 26%

We've discovered 2 warning signs about Fortis. View them for free.

Performance at Fortis Inc. (TSE:FTS) has been reasonably good and CEO Dave Hutchens has done a decent job of steering the company in the right direction. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 8th of May. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.

See our latest analysis for Fortis

Comparing Fortis Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Fortis Inc. has a market capitalization of CA$34b, and reported total annual CEO compensation of CA$16m for the year to December 2024. We note that's an increase of 9.2% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CA$1.7m.

For comparison, other companies in the Canada Electric Utilities industry with market capitalizations above CA$11b, reported a median total CEO compensation of CA$16m. This suggests that Fortis remunerates its CEO largely in line with the industry average. What's more, Dave Hutchens holds CA$9.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2024	2023	Proportion (2024)
Salary	CA$1.7m	CA$1.7m	11%
Other	CA$14m	CA$13m	89%
Total Compensation	CA$16m	CA$14m	100%

Talking in terms of the industry, salary represented approximately 12% of total compensation out of all the companies we analyzed, while other remuneration made up 88% of the pie. Fortis sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Fortis Inc.'s Growth

Over the past three years, Fortis Inc. has seen its earnings per share (EPS) grow by 7.0% per year. The trailing twelve months of revenue was pretty much the same as the prior period.

We generally like to see a little revenue growth, but the modest EPS growth gives us some relief. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Fortis Inc. Been A Good Investment?

Fortis Inc. has served shareholders reasonably well, with a total return of 26% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

The company's decent performance might have made most shareholders happy, possibly making CEO remuneration the least of the concerns to be discussed in the upcoming AGM. In saying that, any proposed increase to CEO compensation will still be assessed on how reasonable it is based on performance and industry benchmarks.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 2 warning signs for Fortis (of which 1 is a bit unpleasant!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from Fortis, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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.