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

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Amar Doman has been the CEO of CanWel Building Materials Group Ltd. (TSE:CWX) since 2010. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out 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$365m, and pays its CEO total annual compensation worth CA$1.1m. (This is based on the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at CA$600k. We looked at a group of companies with market capitalizations from CA$132m to CA$526m, and the median CEO compensation was CA$807k.

As you can see, Amar Doman is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean CanWel Building Materials Group Ltd. is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

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

TSX:CWX CEO Compensation, February 21st 2019
TSX:CWX CEO Compensation, February 21st 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 3.7% per year (measured with a line of best fit). In the last year, its revenue is up 21%.

Sadly for shareholders, earnings per share are actually down, over three years. There’s no doubt that the silver lining is that revenue is up. But it isn’t sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. 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?

Boasting a total shareholder return of 52% over three years, CanWel Building Materials Group Ltd. has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary…

We examined the amount CanWel Building Materials Group Ltd. pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

We think many shareholders would be underwhelmed with the business growth over the last three years.

On the other hand, returns have been good, so the company is doing something right. So on this analysis we’d stop short of criticizing the level of CEO compensation. So you may want to check if insiders are buying CanWel Building Materials Group shares with their own money (free access).

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.