Stock Analysis

Should Shareholders Reconsider Trecora Resources' (NYSE:TREC) CEO Compensation Package?

NYSE:TREC
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The results at Trecora Resources (NYSE:TREC) have been quite disappointing recently and CEO Pat Quarles bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 14 May 2021. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for Trecora Resources

How Does Total Compensation For Pat Quarles Compare With Other Companies In The Industry?

According to our data, Trecora Resources has a market capitalization of US$197m, and paid its CEO total annual compensation worth US$1.8m over the year to December 2020. We note that's a decrease of 22% compared to last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$596k.

On comparing similar companies from the same industry with market caps ranging from US$100m to US$400m, we found that the median CEO total compensation was US$754k. This suggests that Pat Quarles is paid more than the median for the industry. Furthermore, Pat Quarles directly owns US$2.0m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary US$596k US$600k 33%
Other US$1.2m US$1.7m 67%
Total CompensationUS$1.8m US$2.3m100%

On an industry level, around 17% of total compensation represents salary and 83% is other remuneration. It's interesting to note that Trecora Resources pays out a greater portion of remuneration through salary, compared to the industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
NYSE:TREC CEO Compensation May 8th 2021

Trecora Resources' Growth

Over the last three years, Trecora Resources has shrunk its earnings per share by 95% per year. It saw its revenue drop 21% over the last year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Trecora Resources Been A Good Investment?

With a total shareholder return of -40% over three years, Trecora Resources shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

To Conclude...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 1 warning sign for Trecora Resources that investors should be aware of in a dynamic business environment.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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