Shareholders May Be A Bit More Conservative With Cann Group Limited's (ASX:CAN) CEO Compensation For Now

The underwhelming share price performance of Cann Group Limited (ASX:CAN) in the past three years would have disappointed many shareholders. In addition, the company's per-share earnings growth is not looking good, despite growing revenues. In light of this performance, shareholders will have a chance to question the board in the upcoming AGM on 10 November 2021, where they can impact on future company performance by voting on resolutions, including executive compensation. Here's why we think shareholders should hold off on a raise for the CEO at the moment.

See our latest analysis for Cann Group

Comparing Cann Group Limited's CEO Compensation With the industry

Our data indicates that Cann Group Limited has a market capitalization of AU$103m, and total annual CEO compensation was reported as AU$365k for the year to June 2021. We note that's a decrease of 26% compared to last year. We note that the salary portion, which stands at AU$291.2k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below AU$269m, reported a median total CEO compensation of AU$488k. So it looks like Cann Group compensates Peter Crock in line with the median for the industry. Furthermore, Peter Crock directly owns AU$119k worth of shares in the company.

Component	2021	2020	Proportion (2021)
Salary	AU$291k	AU$278k	80%
Other	AU$74k	AU$214k	20%
Total Compensation	AU$365k	AU$492k	100%

On an industry level, roughly 59% of total compensation represents salary and 41% is other remuneration. It's interesting to note that Cann Group pays out a greater portion of remuneration through salary, compared to the industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Cann Group Limited's Growth

Cann Group Limited has reduced its earnings per share by 27% a year over the last three years. Its revenue is up 433% over the last year.

The reduction in EPS, over three years, is arguably concerning. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Cann Group Limited Been A Good Investment?

With a total shareholder return of -90% over three years, Cann Group Limited shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. Shareholders will get the chance at the upcoming AGM to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 4 warning signs for Cann Group you should be aware of, and 2 of them are a bit concerning.

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.

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.

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