Is CanWel Building Materials Group Ltd.’s (TSE:CWX) CEO Overpaid Relative To Its Peers?

Amar Doman became the CEO of CanWel Building Materials Group Ltd. (TSE:CWX) in 2010. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for CanWel Building Materials Group

How Does Amar Doman’s Compensation Compare With Similar Sized Companies?

According to our data, CanWel Building Materials Group Ltd. has a market capitalization of CA$431m, and paid its CEO total annual compensation worth CA$902k over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at CA$600k. When we examined a selection of companies with market caps ranging from CA$264m to CA$1.1b, we found the median CEO total compensation was CA$1.4m.

A first glance this seems like a real positive for shareholders, since Amar Doman is paid less than the average total compensation paid by similar sized companies. While this is a good thing, you’ll need to understand the business better before you can form an opinion.

The graphic below shows how CEO compensation at CanWel Building Materials Group has changed from year to year.

TSX:CWX CEO Compensation, December 9th 2019
TSX:CWX CEO Compensation, December 9th 2019

Is CanWel Building Materials Group Ltd. Growing?

Over the last three years CanWel Building Materials Group Ltd. has shrunk its earnings per share by an average of 42% per year (measured with a line of best fit). The trailing twelve months of revenue was pretty much the same as the prior period.

Sadly for shareholders, earnings per share are actually down, over three years. And the flat revenue is seriously uninspiring. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has CanWel Building Materials Group Ltd. Been A Good Investment?

With a total shareholder return of 32% over three years, CanWel Building Materials Group Ltd. shareholders would, in general, be reasonably content. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.

In Summary…

It appears that CanWel Building Materials Group Ltd. remunerates its CEO below most similar sized companies.

The compensation paid to Amar Doman is lower than is usual at similar sized companies. But the business isn’t growing earnings per share, and the returns to shareholders haven’t been wonderful. There is room for improved company performance, but we don’t see the CEO pay as a big issue here. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at CanWel Building Materials Group.

Important note: CanWel Building Materials Group may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.

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.

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