Does Canadian Western Bank's (TSE:CWB) CEO Salary Compare Well With Industry Peers?

By
Simply Wall St
Published
October 27, 2020
TSX:CWB

Chris Fowler became the CEO of Canadian Western Bank (TSE:CWB) in 2013, 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 assess whether Canadian Western Bank pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Canadian Western Bank

How Does Total Compensation For Chris Fowler Compare With Other Companies In The Industry?

According to our data, Canadian Western Bank has a market capitalization of CA$2.3b, and paid its CEO total annual compensation worth CA$3.1m over the year to October 2019. That's mostly flat as compared to the prior year's compensation. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CA$774k.

On comparing similar companies from the same industry with market caps ranging from CA$1.3b to CA$4.2b, we found that the median CEO total compensation was CA$3.7m. From this we gather that Chris Fowler is paid around the median for CEOs in the industry. What's more, Chris Fowler holds CA$3.1m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20192018Proportion (2019)
Salary CA$774k CA$755k 25%
Other CA$2.3m CA$2.2m 75%
Total CompensationCA$3.1m CA$3.0m100%

On an industry level, around 11% of total compensation represents salary and 89% is other remuneration. Canadian Western Bank pays out 25% of remuneration in the form of a salary, significantly higher than the industry average. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
TSX:CWB CEO Compensation October 27th 2020

A Look at Canadian Western Bank's Growth Numbers

Over the past three years, Canadian Western Bank has seen its earnings per share (EPS) grow by 8.4% per year. Revenue was pretty flat on last year.

We're not particularly impressed by the revenue growth, but we're happy with the modest EPS growth. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Canadian Western Bank Been A Good Investment?

Since shareholders would have lost about 21% over three years, some Canadian Western Bank investors would surely be feeling negative emotions. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

As we noted earlier, Canadian Western Bank pays its CEO in line with similar-sized companies belonging to the same industry. But with negative shareholder returns and unimpressive EPS growth, shareholders will surely be disturbed. We'd stop short of saying CEO compensation is inappropriate, but without an improvement in performance, it's sure to draw criticism. Shareholders will also not want to see performance improving before agreeing to any raise.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. In our study, we found 2 warning signs for Canadian Western Bank you should be aware of, and 1 of them doesn't sit too well with us.

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.

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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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