The results at Trecora Resources (NYSE:TREC) have been quite disappointing recently and CEO Pat Quarles bears some responsibility for this. At the upcoming AGM on 14 May 2021, shareholders can hear from the board including their plans for turning around performance. This will be also be a chance where they can challenge the board on company direction and vote on resolutions such as executive remuneration. From our analysis, we think CEO compensation may need a review in light of the recent performance.
Comparing Trecora Resources' CEO Compensation With the industry
Our data indicates that Trecora Resources has a market capitalization of US$197m, and total annual CEO compensation was reported as US$1.8m for the year to December 2020. That's a notable decrease of 22% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$596k.
On examining similar-sized companies in the industry with market capitalizations between US$100m and US$400m, we discovered that the median CEO total compensation of that group was US$754k. This suggests that Pat Quarles is paid more than the median for the industry. Moreover, Pat Quarles also holds US$2.0m worth of Trecora Resources stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Speaking on an industry level, nearly 17% of total compensation represents salary, while the remainder of 83% is other remuneration. According to our research, Trecora Resources has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at Trecora Resources' Growth Numbers
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.
Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.
Has Trecora Resources Been A Good Investment?
The return of -40% over three years would not have pleased Trecora Resources shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 1 warning sign for Trecora Resources that investors should look into moving forward.
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.
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. 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.
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