What We Learned About Innergex Renewable Energy's (TSE:INE) CEO Compensation

By
Simply Wall St
Published
December 02, 2020

This article will reflect on the compensation paid to Michel Letellier who has served as CEO of Innergex Renewable Energy Inc. (TSE:INE) since 2007. This analysis will also assess whether Innergex Renewable Energy pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Innergex Renewable Energy

How Does Total Compensation For Michel Letellier Compare With Other Companies In The Industry?

Our data indicates that Innergex Renewable Energy Inc. has a market capitalization of CA$4.5b, and total annual CEO compensation was reported as CA$1.5m for the year to December 2019. That's a fairly small increase of 7.1% over the previous year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CA$550k.

In comparison with other companies in the industry with market capitalizations ranging from CA$2.6b to CA$8.3b, the reported median CEO total compensation was CA$1.9m. So it looks like Innergex Renewable Energy compensates Michel Letellier in line with the median for the industry. Moreover, Michel Letellier also holds CA$24m worth of Innergex Renewable Energy stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20192018Proportion (2019)
Salary CA$550k CA$537k 36%
Other CA$991k CA$902k 64%
Total CompensationCA$1.5m CA$1.4m100%

Speaking on an industry level, nearly 42% of total compensation represents salary, while the remainder of 58% is other remuneration. In Innergex Renewable Energy's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

TSX:INE CEO Compensation December 2nd 2020

A Look at Innergex Renewable Energy Inc.'s Growth Numbers

Over the last three years, Innergex Renewable Energy Inc. has shrunk its earnings per share by 116% per year. It achieved revenue growth of 6.5% over the last year.

Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 Innergex Renewable Energy Inc. Been A Good Investment?

Boasting a total shareholder return of 106% over three years, Innergex Renewable Energy Inc. 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...

As previously discussed, Michel is compensated close to the median for companies of its size, and which belong to the same industry. This isn't great when you look at it against the backdrop of EPS growth, which has been negative for the past three years. On the other hand, shareholder returns are showing positive trends over the same time frame. We wouldn't say CEO compensation is too high, but shareholders will probably want to see an increase in EPS before agreeing the business should pay any more.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 2 warning signs for Innergex Renewable Energy you should be aware of, and 1 of them shouldn't be ignored.

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. 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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