We Think Shareholders Are Less Likely To Approve A Large Pay Rise For Polaris Infrastructure Inc.'s (TSE:PIF) CEO For Now

By
Simply Wall St
Published
June 19, 2021
TSX:PIF

Performance at Polaris Infrastructure Inc. (TSE:PIF) has been reasonably good and CEO Marc Murnaghan 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 24 June 2021. However, some shareholders will still be cautious of paying the CEO excessively.

Check out our latest analysis for Polaris Infrastructure

Comparing Polaris Infrastructure Inc.'s CEO Compensation With the industry

Our data indicates that Polaris Infrastructure Inc. has a market capitalization of CA$362m, and total annual CEO compensation was reported as US$480k for the year to December 2020. That's just a smallish increase of 7.9% on last year. In particular, the salary of US$314.2k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar companies from the same industry with market caps ranging from CA$125m to CA$499m, we found that the median CEO total compensation was US$281k. Accordingly, our analysis reveals that Polaris Infrastructure Inc. pays Marc Murnaghan north of the industry median. Furthermore, Marc Murnaghan directly owns CA$8.2m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary US$314k US$273k 65%
Other US$166k US$171k 35%
Total CompensationUS$480k US$445k100%

On an industry level, around 49% of total compensation represents salary and 51% is other remuneration. According to our research, Polaris Infrastructure has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

ceo-compensation
TSX:PIF CEO Compensation June 20th 2021

A Look at Polaris Infrastructure Inc.'s Growth Numbers

Over the past three years, Polaris Infrastructure Inc. has seen its earnings per share (EPS) grow by 90% per year. Its revenue is down 3.8% over the previous year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Polaris Infrastructure Inc. Been A Good Investment?

We think that the total shareholder return of 53%, over three years, would leave most Polaris Infrastructure Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

To Conclude...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. However, any decision to raise CEO pay might be met with some objections from the shareholders given that the CEO is already paid higher than the industry average.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 4 warning signs for Polaris Infrastructure (1 is a bit concerning!) that you should be aware of before investing here.

Switching gears from Polaris Infrastructure, 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. 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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