Should Shareholders Reconsider The Caldwell Partners International Inc.'s (TSE:CWL) CEO Compensation Package?

Key Insights

• Caldwell Partners International's Annual General Meeting to take place on 13th of February
• Total pay for CEO John Wallace includes CA$490.0k salary
• The overall pay is 87% above the industry average
• Over the past three years, Caldwell Partners International's EPS fell by 75% and over the past three years, the total loss to shareholders 50%

The results at The Caldwell Partners International Inc. (TSE:CWL) have been quite disappointing recently and CEO John Wallace bears some responsibility for this. At the upcoming AGM on 13th of February, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.

Check out our latest analysis for Caldwell Partners International

Comparing The Caldwell Partners International Inc.'s CEO Compensation With The Industry

According to our data, The Caldwell Partners International Inc. has a market capitalization of CA$21m, and paid its CEO total annual compensation worth CA$2.0m over the year to August 2023. That's a notable increase of 64% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CA$490k.

In comparison with other companies in the Canada Professional Services industry with market capitalizations under CA$270m, the reported median total CEO compensation was CA$1.1m. Hence, we can conclude that John Wallace is remunerated higher than the industry median. What's more, John Wallace holds CA$623k worth of shares in the company in their own name.

Component	2023	2022	Proportion (2023)
Salary	CA$490k	CA$465k	24%
Other	CA$1.5m	CA$765k	76%
Total Compensation	CA$2.0m	CA$1.2m	100%

Speaking on an industry level, nearly 63% of total compensation represents salary, while the remainder of 37% is other remuneration. It's interesting to note that Caldwell Partners International allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

The Caldwell Partners International Inc.'s Growth

Over the last three years, The Caldwell Partners International Inc. has shrunk its earnings per share by 75% per year. Its revenue is down 36% over the previous year.

The decline in EPS is a bit concerning. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has The Caldwell Partners International Inc. Been A Good Investment?

Few The Caldwell Partners International Inc. shareholders would feel satisfied with the return of -50% over three years. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for Caldwell Partners International (1 doesn't sit too well with us!) that you should be aware of before investing here.

Important note: Caldwell Partners International is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.