Edward Kennedy has been the CEO of The North West Company Inc. (TSE:NWC) since 1997, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for North West
How Does Total Compensation For Edward Kennedy Compare With Other Companies In The Industry?
According to our data, The North West Company Inc. has a market capitalization of CA$1.6b, and paid its CEO total annual compensation worth CA$5.1m over the year to January 2020. That's a notable increase of 53% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CA$843k.
In comparison with other companies in the industry with market capitalizations ranging from CA$1.3b to CA$4.1b, the reported median CEO total compensation was CA$8.5m. That is to say, Edward Kennedy is paid under the industry median. Furthermore, Edward Kennedy directly owns CA$14m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | CA$843k | CA$822k | 17% |
| Other | CA$4.2m | CA$2.5m | 83% |
| Total Compensation | CA$5.1m | CA$3.3m | 100% |
Talking in terms of the industry, salary represented approximately 20% of total compensation out of all the companies we analyzed, while other remuneration made up 80% of the pie. In North West's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
The North West Company Inc.'s Growth
The North West Company Inc. has seen its earnings per share (EPS) increase by 23% a year over the past three years. Its revenue is up 13% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. 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 The North West Company Inc. Been A Good Investment?
The North West Company Inc. has generated a total shareholder return of 26% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
In Summary...
As we noted earlier, North West pays its CEO lower than the norm for similar-sized companies belonging to the same industry. Meanwhile, EPS growth has been rock solid for the past three years. Shareholder returns, in comparison, have not been as impressive. We would wish for better returns (whether dividends or capital gains) but we do admire the solidEPS growth on show here. So it's fair to say Edward has done quite well despite modest compensation and shareholders might not be averse to a raise.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 3 warning signs for North West that investors should be aware of in a dynamic business environment.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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About TSX:NWC
North West
Through its subsidiaries, engages in the retail of food and everyday products and services to rural communities and urban neighborhood markets in northern Canada, rural Alaska, the South Pacific, and the Caribbean.
Flawless balance sheet established dividend payer.
