What Can We Learn About Clearford Water Systems' (CVE:CLI) CEO Compensation?

Simply Wall St
December 25, 2020
Source: Shutterstock

Kevin Loiselle has been the CEO of Clearford Water Systems Inc. (CVE:CLI) since 2013, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Clearford Water Systems

How Does Total Compensation For Kevin Loiselle Compare With Other Companies In The Industry?

Our data indicates that Clearford Water Systems Inc. has a market capitalization of CA$2.0m, and total annual CEO compensation was reported as CA$439k for the year to December 2019. We note that's a decrease of 24% compared to last year. In particular, the salary of CA$300.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under CA$257m, the reported median total CEO compensation was CA$368k. So it looks like Clearford Water Systems compensates Kevin Loiselle in line with the median for the industry.

Component20192018Proportion (2019)
Salary CA$300k CA$300k 68%
Other CA$139k CA$276k 32%
Total CompensationCA$439k CA$576k100%

Talking in terms of the industry, salary represented approximately 35% of total compensation out of all the companies we analyzed, while other remuneration made up 65% of the pie. Clearford Water Systems is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

TSXV:CLI CEO Compensation December 26th 2020

A Look at Clearford Water Systems Inc.'s Growth Numbers

Over the last three years, Clearford Water Systems Inc. has shrunk its earnings per share by 27% per year. In the last year, its revenue is up 20%.

Investors would be a bit wary of companies that have lower EPS But on the other hand, revenue growth is strong, suggesting a brighter future. It's hard to reach a conclusion about business performance right now. This may be one to watch. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Clearford Water Systems Inc. Been A Good Investment?

Since shareholders would have lost about 87% over three years, some Clearford Water Systems Inc. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As previously discussed, Kevin is compensated close to the median for companies of its size, and which belong to the same industry. But revenue growth seems to be inching northward, a heartening sign for the company. On the other hand, shareholder returns for Kevin are negative over the same period. EPS growth is bleak as well, adding fuel to the fire. It's tough for us to say Kevin is overpaid but a mixed bag in terms of performance will surely irk shareholders and reduce chances of a raise.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 4 warning signs for Clearford Water Systems you should be aware of, and 3 of them make us uncomfortable.

Important note: Clearford Water Systems 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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