Shareholders Will Probably Be Cautious Of Increasing CIBT Education Group Inc.'s (TSE:MBA) CEO Compensation At The Moment

By
Simply Wall St
Published
January 22, 2022
TSX:MBA
Source: Shutterstock

Performance at CIBT Education Group Inc. (TSE:MBA) has not been particularly rosy recently and shareholders will likely be holding CEO Toby Chu and the board accountable for this. At the upcoming AGM on 28 January 2022, shareholders may have the opportunity to influence management to turn the performance around by voting on resolutions such as executive remuneration and other matters. We think most shareholders will probably pass the CEO compensation, based on what we gathered.

Check out our latest analysis for CIBT Education Group

How Does Total Compensation For Toby Chu Compare With Other Companies In The Industry?

At the time of writing, our data shows that CIBT Education Group Inc. has a market capitalization of CA$44m, and reported total annual CEO compensation of CA$423k for the year to August 2021. Notably, that's an increase of 40% over the year before. In particular, the salary of CA$264.0k, makes up a huge portion of the total compensation being paid to the CEO.

In comparison with other companies in the industry with market capitalizations under CA$251m, the reported median total CEO compensation was CA$806k. Accordingly, CIBT Education Group pays its CEO under the industry median. Moreover, Toby Chu also holds CA$5.9m worth of CIBT Education Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20212020Proportion (2021)
Salary CA$264k CA$264k 62%
Other CA$159k CA$38k 38%
Total CompensationCA$423k CA$302k100%

On an industry level, roughly 62% of total compensation represents salary and 38% is other remuneration. Our data reveals that CIBT Education Group allocates salary more or less in line with the wider market. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

ceo-compensation
TSX:MBA CEO Compensation January 22nd 2022

CIBT Education Group Inc.'s Growth

Over the last three years, CIBT Education Group Inc. has shrunk its earnings per share by 40% per year. In the last year, its revenue is up 6.2%.

Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has CIBT Education Group Inc. Been A Good Investment?

With a three year total loss of 8.7% for the shareholders, CIBT Education Group Inc. would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. 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. That's why we did our research, and identified 4 warning signs for CIBT Education Group (of which 2 are a bit concerning!) that you should know about in order to have a holistic understanding of the stock.

Important note: CIBT Education Group 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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