We Take A Look At Whether Clean Harbors, Inc.'s (NYSE:CLH) CEO May Be Underpaid

Simply Wall St
May 26, 2021
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Shareholders will be pleased by the impressive results for Clean Harbors, Inc. (NYSE:CLH) recently and CEO Alan McKim has played a key role. At the upcoming AGM on 02 June 2021, they will get a chance to hear the board review the company results, discuss future strategy and cast their vote on any resolutions such as executive remuneration. Here we will show why we think CEO compensation is appropriate and discuss the case for a pay rise.

See our latest analysis for Clean Harbors

Comparing Clean Harbors, Inc.'s CEO Compensation With the industry

According to our data, Clean Harbors, Inc. has a market capitalization of US$5.1b, and paid its CEO total annual compensation worth US$3.8m over the year to December 2020. We note that's a small decrease of 6.9% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$1.3m.

For comparison, other companies in the same industry with market capitalizations ranging between US$4.0b and US$12b had a median total CEO compensation of US$6.4m. Accordingly, Clean Harbors pays its CEO under the industry median. Moreover, Alan McKim also holds US$337m worth of Clean Harbors stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20202019Proportion (2020)
Salary US$1.3m US$1.3m 33%
Other US$2.6m US$2.8m 67%
Total CompensationUS$3.8m US$4.1m100%

Talking in terms of the industry, salary represented approximately 24% of total compensation out of all the companies we analyzed, while other remuneration made up 76% of the pie. Clean Harbors pays out 33% of remuneration in the form of a salary, significantly higher than the industry average. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

NYSE:CLH CEO Compensation May 27th 2021

Clean Harbors, Inc.'s Growth

Over the past three years, Clean Harbors, Inc. has seen its earnings per share (EPS) grow by 11% per year. It saw its revenue drop 11% 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. 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 Clean Harbors, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Clean Harbors, Inc. for providing a total return of 76% over three years. 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.

To Conclude...

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.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for Clean Harbors (1 is significant!) that you should be aware of before investing here.

Switching gears from Clean Harbors, 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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