Stock Analysis

We Think Shareholders Are Less Likely To Approve A Large Pay Rise For K-Bro Linen Inc.'s (TSE:KBL) CEO For Now

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Performance at K-Bro Linen Inc. (TSE:KBL) has been reasonably good and CEO Linda McCurdy has done a decent job of steering the company in the right direction. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 29 June 2021. However, some shareholders will still be cautious of paying the CEO excessively.

View our latest analysis for K-Bro Linen

How Does Total Compensation For Linda McCurdy Compare With Other Companies In The Industry?

Our data indicates that K-Bro Linen Inc. has a market capitalization of CA$463m, and total annual CEO compensation was reported as CA$1.9m for the year to December 2020. That's mostly flat as compared to the prior year's compensation. We think total compensation is more important but our data shows that the CEO salary is lower, at CA$535k.

For comparison, other companies in the same industry with market capitalizations ranging between CA$247m and CA$990m had a median total CEO compensation of CA$838k. This suggests that Linda McCurdy is paid more than the median for the industry. Furthermore, Linda McCurdy directly owns CA$8.3m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary CA$535k CA$535k 27%
Other CA$1.4m CA$1.4m 73%
Total CompensationCA$1.9m CA$2.0m100%

Talking in terms of the industry, salary represented approximately 52% of total compensation out of all the companies we analyzed, while other remuneration made up 48% of the pie. It's interesting to note that K-Bro Linen 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.

TSX:KBL CEO Compensation June 23rd 2021

A Look at K-Bro Linen Inc.'s Growth Numbers

Over the past three years, K-Bro Linen Inc. has seen its earnings per share (EPS) grow by 17% per year. It saw its revenue drop 26% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has K-Bro Linen Inc. Been A Good Investment?

With a total shareholder return of 30% over three years, K-Bro Linen Inc. shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. However, if the board proposes to increase the compensation, some shareholders might have questions given that the CEO is already being paid higher than the industry.

CEO compensation can have a massive impact on performance, but it's just one element. That's why we did some digging and identified 2 warning signs for K-Bro Linen that you should be aware of before investing.

Important note: K-Bro Linen 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. 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.
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