How Should Investors React To Black Diamond Group Limited’s (TSE:BDI) CEO Pay?

In 2009 Trevor Haynes was appointed CEO of Black Diamond Group Limited (TSE:BDI). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Black Diamond Group

How Does Trevor Haynes’s Compensation Compare With Similar Sized Companies?

Our data indicates that Black Diamond Group Limited is worth CA$116m, and total annual CEO compensation is CA$1.0m. (This figure is for the year to December 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at CA$663k. We examined a group of similar sized companies, with market capitalizations of below CA$264m. The median CEO compensation in that group is CA$159k.

As you can see, Trevor Haynes is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Black Diamond Group Limited 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 Black Diamond Group has changed from year to year.

TSX:BDI CEO Compensation, February 26th 2019
TSX:BDI CEO Compensation, February 26th 2019

Is Black Diamond Group Limited Growing?

Over the last three years Black Diamond Group Limited has shrunk its earnings per share by an average of 67% per year (measured with a line of best fit). Its revenue is up 8.3% over last year.

Sadly for shareholders, earnings per share are actually down, over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.

Has Black Diamond Group Limited Been A Good Investment?

Since shareholders would have lost about 42% over three years, some Black Diamond Group Limited shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

We examined the amount Black Diamond Group Limited pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

Arguably worse, investors are without a positive return for the last three years. Some might well form the view that the CEO is paid too generously! So you may want to check if insiders are buying Black Diamond Group shares with their own money (free access).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

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.