Is Rocky Mountain Liquor Inc.’s (CVE:RUM) CEO Salary Justified?

Peter Byrne has been the CEO of Rocky Mountain Liquor Inc. (CVE:RUM) since 2008. First, this article will compare CEO compensation with compensation at similar sized companies. Then we’ll look at a snap shot of the business growth. 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.

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How Does Peter Byrne’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Rocky Mountain Liquor Inc. has a market cap of CA$2.6m, and is paying total annual CEO compensation of CA$176k. (This number is for the twelve months until 2017). It is worth noting that the CEO compensation consists almost entirely of the salary, worth CA$175k. We took a group of companies with market capitalizations below CA$268m, and calculated the median CEO compensation to be CA$158k.

That means Peter Byrne receives fairly typical remuneration for the CEO of a company that size. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance. Take a look at Rocky Mountain Liquor’s profit growth by viewing this free data-rich visualization of earnings, revenue and cash flow.

You can see a visual representation of the CEO compensation at Rocky Mountain Liquor, below.

TSXV:RUM CEO Compensation January 11th 19
TSXV:RUM CEO Compensation January 11th 19

Is Rocky Mountain Liquor Inc. Growing?

Rocky Mountain Liquor Inc. has reduced its earnings per share by an average of 47% a year, over the last three years. The trailing twelve months of revenue was pretty much the same as the prior period.

Few shareholders would be pleased to read that earnings per share are lower over three years. And the flat revenue is seriously uninspiring. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO.

Has Rocky Mountain Liquor Inc. Been A Good Investment?

Since shareholders would have lost about 18% over three years, some Rocky Mountain Liquor Inc. shareholders would surely be feeling negative emotions. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary…

Peter Byrne is paid around the same as most CEOs of similar size companies.

The company isn’t growing EPS, and shareholder returns have been disappointing. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves. Whatever your view on compensation, you might want to check if insiders are buying or selling Rocky Mountain Liquor shares (free trial).

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.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.