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How Should Investors React To Wavefront Technology Solutions Inc.'s (CVE:WEE) CEO Pay?

Simply Wall St

Brett Davidson has been the CEO of Wavefront Technology Solutions Inc. (CVE:WEE) since 2003. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Wavefront Technology Solutions

How Does Brett Davidson's Compensation Compare With Similar Sized Companies?

According to our data, Wavefront Technology Solutions Inc. has a market capitalization of CA$12m, and pays its CEO total annual compensation worth CA$376k. (This figure is for the year to August 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at CA$300k. We took a group of companies with market capitalizations below CA$263m, and calculated the median CEO total compensation to be CA$144k.

As you can see, Brett Davidson is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Wavefront Technology Solutions Inc. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see, below, how CEO compensation at Wavefront Technology Solutions has changed over time.

TSXV:WEE CEO Compensation, September 11th 2019

Is Wavefront Technology Solutions Inc. Growing?

Wavefront Technology Solutions Inc. has increased its earnings per share (EPS) by an average of 34% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 30%.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Although we don't have analyst forecasts, you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Wavefront Technology Solutions Inc. Been A Good Investment?

With a three year total loss of 33%, Wavefront Technology Solutions Inc. would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We compared total CEO remuneration at Wavefront Technology Solutions Inc. with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

However we must not forget that the EPS growth has been very strong over three years. On the other hand returns to investors over the same period have probably disappointed many. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Wavefront Technology Solutions.

If you want to buy a stock that is better than Wavefront Technology Solutions, this free list of high return, low debt companies is a great place to look.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.