Frederick W. McTaggart
About Frederick W. McTaggart
Frederick W. McTaggart (age 62) is President since October 2000, CEO since January 1, 2004, and a director since 1998 at Consolidated Water Co. Ltd. (CWCO). He previously served as CFO (Feb 2001–Jan 1, 2004) and spent 1987–2000 at Water Authority—Cayman, culminating as Managing Director; he holds a B.S. in Building Construction from Georgia Institute of Technology (1985) . CWCO reported 2024 net income of $28.2M ($1.77 diluted EPS) and paid ~$6.3M in dividends; shareholders approved say‑on‑pay at ~88% in 2024, and CEO pay is directionally aligned with TSR and net income trends per Pay‑vs‑Performance disclosures .
Past Roles
| Organization | Role | Years | Strategic Impact |
|---|---|---|---|
| Water Authority—Cayman | Managing Director | 1994–2000 | Led government utility; water operations oversight |
| Water Authority—Cayman | Deputy Director; Operations Engineer | 1987–1994 | Technical and operational leadership in desalination |
| Consolidated Water Co. Ltd. | Chief Financial Officer | 2001–2004 | Finance leadership prior to CEO role |
External Roles
No current external public company directorships disclosed in the proxy; prior external roles not reported beyond Water Authority—Cayman (government) .
Fixed Compensation
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Base Salary ($) | 525,000 | 551,250 | 562,275 |
| Benefits & Other ($) | 18,600 car allowance | 19,200 car allowance | 19,800 car allowance |
| Total Fixed ($) | 543,600 | 570,450 | 582,075 |
Performance Compensation
| Component | Structure | Target | Actual/Payout | Notes |
|---|---|---|---|---|
| Annual Cash Incentive (2024) | Weighted on Net Income (40%), Revenue (35%), Gross Margin (15%), Individual (10%) | CEO target bonus = 70% of base at “Target”; Threshold 35%; Max 110% | Company results vs target: Net Income 170.10%; Revenue 110.47%; Gross Margin 113.72% . CEO earned $599,245 (107% of base) vs target $393,593 . | Performance plan with defined thresholds/upper bounds |
| Long‑Term Equity (granted 1/1/2024) | 50% time‑vest RSUs; 50% PSUs tied to 3‑yr cumulative metrics | 3,949 time‑vest shares; 3,949 PSUs at target | PSUs ultimately adjust based on 3‑yr results; 2022–2024 performance achieved above target across metrics (see table below) . | Metrics: 3‑yr OCF (20%), EPS (40%), Revenue ex energy (40%) |
| Clawback Policy | Nasdaq 10D‑1 compliant; 3‑year lookback for excess incentive pay upon restatements | — | — | Executives acknowledged and are bound by policy |
| Hedging/Pledging | Prohibited for directors/officers per Insider Trading Policy and program highlights | — | — | Rule 10b5‑1 plans permitted |
Detailed 3‑year long‑term performance (for awards measured over 2022–2024):
| LT Metric (2022–2024) | Threshold (% of Target) | Target | Upper (% of Target) | Actual | Actual (% of Target) |
|---|---|---|---|---|---|
| Cumulative Operating Cash Flow ($) | 70% | 41,923,337 | 130% | 65,818,099 | 157.0% |
| Cumulative EPS ($) | 86% | 1.37 | 140% | 4.10 | 300.2% |
| Cumulative Revenue ex pass‑through energy ($) | 85% | 184,608,289 | 115% | 352,211,187 | 190.8% |
Equity Ownership & Alignment
| Item | Value |
|---|---|
| Beneficial Ownership (Ordinary Shares) | 289,158 shares; 1.82% of class |
| Shared Investment Power | 287,858 shares (of his total) |
| Shares Vested in 2024 | 28,024 shares vested; value realized $725,541 |
| Outstanding Unvested/Unearned Awards (as of 12/31/2024) | Time‑vest: 3,104 (vest 12/31/2025); 2,632 (vest 12/31/2025 & 12/31/2026). Performance: 9,312 (measured to 12/31/2025); 3,949 (measured to 12/31/2026). Market values as disclosed: $80,363; $68,142; $241,088; $102,240 respectively |
| Hedging/Pledging | Company stock may not be hedged or pledged by directors/officers |
| Ownership Guidelines | Not disclosed for executives in proxy; director equity retainer >40% of compensation |
Employment Terms
| Term | Details |
|---|---|
| Contract & Tenure | Three‑year rolling agreement (original 1/1/2004), extended annually; current term through 12/31/2027 |
| Severance (non‑renewal) | Lump sum equal to twice annual base salary if Company elects not to renew; if terminated without cause, entitled to aggregate annual salaries due over remaining term |
| Change‑of‑Control | Not specified for CEO; CIC severance provisions disclosed for CFO/COO only |
| Perquisites | Car allowance: $19,800 (2024; increases $50/month annually) |
| Non‑compete / Non‑solicit | Severance framework references non‑competition period alignment for other executives; specific CEO restrictive covenants not detailed beyond severance |
| Clawback | Incentive Compensation Recoupment Policy (restatement‑based recovery, equity and cash) |
| Insider Trading | Hedging/short sales/derivatives prohibited; 10b5‑1 plans permitted |
Board Governance
- Role: Director since 1998; sole executive director; Chair of Environmental & Social Governance (ESG) Committee .
- Independence: Seven of eight directors are independent; McTaggart is the only non‑independent (executive) director; Chairman is independent (Wilmer F. Pergande) .
- Committees: ESG Committee Chair; Compensation Committee, Audit Committee, Nominating & Corporate Governance membership matrix shown below .
| Committee | Members | Chair |
|---|---|---|
| Compensation | Butler, Ebanks, Flowers, Whittaker | Whittaker |
| Audit | Butler, Pergande, Sokolow, Whittaker | Sokolow |
| Nominating & Corporate Governance | Beidler‑D’Aguilar, Ebanks, Pergande, Sokolow | Sokolow (Chair coded in matrix) |
| Environmental & Social Governance | Beidler‑D’Aguilar, Butler, Flowers, McTaggart | McTaggart |
Additional governance details:
- Board meetings held: 4 in 2024; each director attended ≥75% of Board and committee meetings .
- Director compensation: Executive directors (McTaggart) not entitled to director cash/equity retainers; non‑executive director fee and equity retainer schedules disclosed .
Compensation Trends and Peer Benchmarking
- Pay Mix (2024): CEO fixed 38% base + 1% benefits; variable 41% cash incentive + 19% equity incentive (per mix chart) .
- Peer group: 12 companies across water/utilities and adjacent industries; CWCO ranks 53rd percentile on revenue, 45th percentile on market cap, 33rd percentile on EBITDA (as of Jan 15, 2024; $000s) .
- Say‑on‑pay support: ~88% for 2024; Company maintains annual say‑on‑pay cadence .
Performance & Track Record
- Segment performance (2024): Revenue $133.97M; gross margin 34%; retail operating income $14.28M; bulk operating income $8.75M; services operating income $6.39M; manufacturing operating income $2.87M .
- Risk items affecting execution:
- Cayman retail license renegotiation with OfReg may materially reduce retail segment operating income; concession granted Feb 18, 2025 maintains 1990 license terms pending new license .
- Bahamas receivable risk: $28.4M due from WSC at 12/31/2024, ~81% delinquent; ongoing payment discussions; historical full collections but liquidity risk persists .
- Material weakness in ICFR (IT general controls) as of 12/31/2024; adverse ICFR opinion; remediation in progress .
- Dividends: $0.41 per share total 2024; $0.11 declared payable 4/30/2025 .
Director Compensation (for reference, McTaggart not eligible as executive)
| Role | Cash Retainer ($) | Equity Retainer (Ordinary Shares, $ value) |
|---|---|---|
| Chairman (non‑exec) | 103,000 | 32,500 |
| Director (non‑exec) | 33,000 | 33,150 |
| Committee Member (Comp/Audit/Nom/ESG) | 3,300/4,400/2,200/4,400 | 5,835/7,780/3,890/7,780 |
| Committee Chair (Comp/Audit/Nom/ESG) | 5,550/7,400/3,700/7,400 | 7,485/9,980/4,990/9,980 |
Compensation Detail Summary (CEO)
| Year | Base ($) | Bonus ($) | Stock Awards ($) | Other ($) | Total ($) |
|---|---|---|---|---|---|
| 2022 | 525,000 | 525,000 | 262,500 | 18,600 | 1,331,100 |
| 2023 | 551,250 | 600,000 | 275,625 | 19,200 | 1,446,075 |
| 2024 | 562,275 | 599,245 | 281,138 | 19,800 | 1,462,458 |
Board Service History and Dual‑Role Implications
- McTaggart serves as CEO and director, with an independent Chairman of the Board, which mitigates CEO‑Chair dual‑role concerns and enhances independent oversight; ESG committee chaired by McTaggart aligns executive accountability to ESG matters .
- Independence: McTaggart is not independent; other governance structures (independent committees, clawback, hedging ban) aim to maintain shareholder alignment .
Risk Indicators & Red Flags
- ICFR Material Weakness: Adverse opinion on internal controls as of 12/31/2024; risk of control‑related misstatements until remediated .
- Regulatory License Risk: OfReg negotiations could materially reduce retail economics; potential asset impairment if terms are unfavorable .
- Receivables Concentration: WSC delinquency and Bahamas sovereign credit profile (Moody’s B1) elevate liquidity risk at CW‑Bahamas .
- Governance Policies: Clawbacks in place; hedging/pledging prohibited; no repricing/modification of equity awards disclosed .
Compensation Peer Group (2024)
Artesian Resources, Caribbean Utilities, Chesapeake Utilities, Energy Recovery, Genie Energy, Global Water Resources, Middlesex Water, Pure Cycle, RGC Resources, SJW Group, Unitil, York Water; CWCO positioned around median revenue and market cap, lower EBITDA percentile (context for at‑risk pay design) .
Equity Award Mechanics and Vesting
- Grant timing: Pre‑determined annual grant schedule; consideration of MNPI; disclosure timing not used to influence award values .
- 2024 grants: CEO 3,949 RSUs time‑vesting (1/3 per year Dec 31, 2024–2026) and 3,949 PSUs tied to 3‑year goals ending Dec 31, 2026 .
- Outstanding unearned awards by tranche and vesting/measurement dates detailed above .
Investment Implications
- Pay‑for‑performance: Strong linkage via short‑term net income/revenue/margin and robust long‑term 3‑year EPS/OCF/revenue goals; 2022–2024 outperformance triggered substantial PSU vesting, signaling execution strength in core segments .
- Alignment: 1.82% direct ownership and prohibition on hedging/pledging support alignment; annual RSU/PSU cadence implies periodic vesting‑related share issuance rather than option‑driven selling pressure; Section 16 late filings minimal (none cited for McTaggart) .
- Risks to watch: Retail license renegotiation (earnings power compression risk), ICFR remediation progress, WSC collections cadence; these are potential catalysts for estimate revisions and valuation multiple re‑rating .
- Governance quality: Independent chair, fully independent comp/audit committees, clawbacks and hedging bans are positives; ESG chaired by CEO provides accountability but warrants monitoring for independence balance .
Say‑on‑pay support (~88%) and peer benchmarking suggest investor acceptance of the current pay structure, but the outcome of the Cayman retail license and Bahamas receivable trends will be primary drivers of incentive attainment and equity value over the next 12–18 months .