Is Empire Industries Ltd (CVE:EIL) Excessively Paying Its CEO?

Kenneth Nelson became the CEO of Empire Industries Ltd (CVE:EIL) in 2006. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Empire Industries

How Does Kenneth Nelson’s Compensation Compare With Similar Sized Companies?

Our data indicates that Empire Industries Ltd is worth CA$41m, and total annual CEO compensation is CA$351k. (This figure is for the year to 2017). It is worth noting that the CEO compensation consists almost entirely of the salary, worth CA$340k. We took a group of companies with market capitalizations below CA$266m, and calculated the median CEO compensation to be CA$155k.

It would therefore appear that Empire Industries Ltd pays Kenneth Nelson more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

You can see a visual representation of the CEO compensation at Empire Industries, below.

TSXV:EIL CEO Compensation November 30th 18
TSXV:EIL CEO Compensation November 30th 18

Is Empire Industries Ltd Growing?

Empire Industries Ltd has reduced its earnings per share by an average of 107% a year, over the last three years. In the last year, its revenue is up 6.3%.

Sadly for shareholders, earnings per share are actually down, over three years. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO.

Although we don’t have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Empire Industries Ltd Been A Good Investment?

Boasting a total shareholder return of 33% over three years, Empire Industries Ltd has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary…

We examined the amount Empire Industries 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.

Earnings per share have not grown in three years, and the revenue growth fails to impress us.

On the other hand, returns have been good, so the company is doing something right. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. So you may want to check if insiders are buying Empire Industries shares with their own money (free access).

Or you might rather take a peek at this analytical visualization of historic cash flow, earnings and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.