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Why We Think Exco Technologies Limited's (TSE:XTC) CEO Compensation Is Not Excessive At All

The performance at Exco Technologies Limited (TSE:XTC) has been rather lacklustre of late and shareholders may be wondering what CEO Darren Kirk is planning to do about this. They will get a chance to exercise their voting power to influence the future direction of the company in the next AGM on 26 January 2022. Setting appropriate executive remuneration to align with the interests of shareholders may also be a way to influence the company performance in the long run. In our opinion, CEO compensation does not look excessive and we discuss why.

View our latest analysis for Exco Technologies

How Does Total Compensation For Darren Kirk Compare With Other Companies In The Industry?

At the time of writing, our data shows that Exco Technologies Limited has a market capitalization of CA$393m, and reported total annual CEO compensation of CA$1.1m for the year to September 2021. We note that's an increase of 50% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CA$500k.

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For comparison, other companies in the same industry with market capitalizations ranging between CA$250m and CA$1.0b had a median total CEO compensation of CA$4.6m. This suggests that Darren Kirk is paid below the industry median. Moreover, Darren Kirk also holds CA$300k worth of Exco Technologies stock directly under their own name.

Component

2021

2020

Proportion (2021)

Salary

CA$500k

CA$450k

44%

Other

CA$640k

CA$312k

56%

Total Compensation

CA$1.1m

CA$762k

100%

Talking in terms of the industry, salary represented approximately 23% of total compensation out of all the companies we analyzed, while other remuneration made up 77% of the pie. Exco Technologies is paying a higher share of its remuneration through a salary in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
ceo-compensation

Exco Technologies Limited's Growth

Over the last three years, Exco Technologies Limited has not seen its earnings per share change much, though they have deteriorated slightly. Its revenue is up 12% over the last year.

Its a bit disappointing to see that the company has failed to grow its EPS. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for us to put aside my concerns around EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 Exco Technologies Limited Been A Good Investment?

With a total shareholder return of 25% over three years, Exco Technologies Limited shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

Despite the positive returns on shareholders' investments, the fact that earnings have failed to grow makes us skeptical about the stock keeping up its current momentum. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.

So you may want to check if insiders are buying Exco Technologies shares with their own money (free access).

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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.