Here's What We Think About Big River Industries' (ASX:BRI) CEO Pay

Jim Bindon became the CEO of Big River Industries Limited (ASX:BRI) in 2005, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Big River Industries.

Check out our latest analysis for Big River Industries

Comparing Big River Industries Limited's CEO Compensation With the industry

At the time of writing, our data shows that Big River Industries Limited has a market capitalization of AU$99m, and reported total annual CEO compensation of AU$464k for the year to June 2020. We note that's an increase of 10% above last year. Notably, the salary which is AU$423.0k, represents most of the total compensation being paid.

For comparison, other companies in the industry with market capitalizations below AU$262m, reported a median total CEO compensation of AU$214k. Accordingly, our analysis reveals that Big River Industries Limited pays Jim Bindon north of the industry median. Moreover, Jim Bindon also holds AU$661k worth of Big River Industries stock directly under their own name.

Speaking on an industry level, nearly 74% of total compensation represents salary, while the remainder of 26% is other remuneration. According to our research, Big River Industries has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Big River Industries Limited's Growth Numbers

Big River Industries Limited has reduced its earnings per share by 20% a year over the last three years. Its revenue is up 14% over the last year.

The decline in EPS is a bit concerning. While the revenue growth is good to see, it is outweighed by the fact that EPS are down, over three years. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Big River Industries Limited Been A Good Investment?

Since shareholders would have lost about 38% over three years, some Big River Industries Limited investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As previously discussed, Jim is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Big River Industries that you should be aware of before investing.

Important note: Big River Industries is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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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