Here's Why Shareholders May Want To Be Cautious With Increasing Clearway Energy, Inc.'s (NYSE:CWEN.A) CEO Pay Packet

Key Insights

• Clearway Energy to hold its Annual General Meeting on 25th of April
• CEO Chris Sotos' total compensation includes salary of US$665.2k
• The total compensation is similar to the average for the industry
• Clearway Energy's EPS grew by 46% over the past three years while total shareholder loss over the past three years was 7.8%

In the past three years, the share price of Clearway Energy, Inc. (NYSE:CWEN.A) has struggled to generate growth for its shareholders. However, what is unusual is that EPS growth has been positive, suggesting that the share price has diverged from fundamentals. These are some of the concerns that shareholders may want to bring up at the next AGM held on 25th of April. They could also influence management through voting on resolutions such as executive remuneration. We think shareholders might be reluctant to increase compensation for the CEO at the moment, according to our analysis below.

Check out our latest analysis for Clearway Energy

Comparing Clearway Energy, Inc.'s CEO Compensation With The Industry

Our data indicates that Clearway Energy, Inc. has a market capitalization of US$4.4b, and total annual CEO compensation was reported as US$3.4m for the year to December 2023. This means that the compensation hasn't changed much from last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$665k.

For comparison, other companies in the American Renewable Energy industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$3.1m. So it looks like Clearway Energy compensates Chris Sotos in line with the median for the industry. What's more, Chris Sotos holds US$7.5m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	US$665k	US$660k	19%
Other	US$2.8m	US$2.7m	81%
Total Compensation	US$3.4m	US$3.3m	100%

Talking in terms of the industry, salary represented approximately 19% of total compensation out of all the companies we analyzed, while other remuneration made up 81% of the pie. There isn't a significant difference between Clearway Energy and the broader market, in terms of salary allocation in the overall compensation package. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Clearway Energy, Inc.'s Growth

Clearway Energy, Inc.'s earnings per share (EPS) grew 46% per year over the last three years. In the last year, its revenue is up 10%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Clearway Energy, Inc. Been A Good Investment?

With a three year total loss of 7.8% for the shareholders, Clearway Energy, Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. These concerns should be addressed at the upcoming AGM, where shareholders can question the board and evaluate if their judgement and decision making is still in line with their expectations.

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 Clearway Energy (1 is concerning!) that you should be aware of before investing here.

Switching gears from Clearway Energy, 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.