Why Empire Industries Ltd.’s (CVE:EIL) CEO Pay Matters To You

Kenneth Nelson has been the CEO of Empire Industries Ltd. (CVE:EIL) since 2006. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Empire Industries

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

At the time of writing our data says that Empire Industries Ltd. has a market cap of CA$39m, and is paying total annual CEO compensation of CA$351k. (This is based on the year to December 2017). Notably, the salary of CA$340k is the vast majority of the CEO compensation. We examined a group of similar sized companies, with market capitalizations of below CA$267m. The median CEO total compensation in that group is CA$143k.

As you can see, Kenneth Nelson is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Empire Industries Ltd. is paying too much. 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, April 18th 2019
TSXV:EIL CEO Compensation, April 18th 2019

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 (measured with a line of best fit). It achieved revenue growth of 5.7% over the last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. The modest increase in revenue in the last year isn’t enough to make me overlook the disappointing change in earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don’t have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Empire Industries Ltd. Been A Good Investment?

Since shareholders would have lost about 5.0% over three years, some Empire Industries Ltd. shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

We compared total CEO remuneration at Empire Industries Ltd. with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

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

Arguably worse, investors are without a positive return for the last three years. In our opinion the CEO might be paid too generously! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Empire Industries (free visualization of insider trades).

If you want to buy a stock that is better than Empire Industries, this free list of high return, low debt companies is a great place to look.

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.