Stock Analysis

Shareholders Will Most Likely Find Big Rock Brewery Inc.'s (TSE:BR) CEO Compensation Acceptable

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The share price of Big Rock Brewery Inc. (TSE:BR) has been growing in the past few years, however, the per-share earnings growth has been lacking, suggesting something is amiss. These concerns will be at the front of shareholders' minds as they go into the AGM coming up on 13 May 2021. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. In our analysis below, we show why shareholders may consider holding off a raise for the CEO's compensation until company performance improves.

View our latest analysis for Big Rock Brewery

Comparing Big Rock Brewery Inc.'s CEO Compensation With the industry

Our data indicates that Big Rock Brewery Inc. has a market capitalization of CA$44m, and total annual CEO compensation was reported as CA$467k for the year to December 2020. We note that's a decrease of 30% compared to last year. Notably, the salary which is CA$275.0k, represents a considerable chunk of the total compensation being paid.

On comparing similar-sized companies in the industry with market capitalizations below CA$244m, we found that the median total CEO compensation was CA$445k. So it looks like Big Rock Brewery compensates Wayne Arsenault in line with the median for the industry. Moreover, Wayne Arsenault also holds CA$226k worth of Big Rock Brewery stock directly under their own name.

Component20202019Proportion (2020)
Salary CA$275k CA$258k 59%
Other CA$192k CA$408k 41%
Total CompensationCA$467k CA$666k100%

Talking in terms of the industry, salary represented approximately 42% of total compensation out of all the companies we analyzed, while other remuneration made up 58% of the pie. According to our research, Big Rock Brewery has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

TSX:BR CEO Compensation May 7th 2021

A Look at Big Rock Brewery Inc.'s Growth Numbers

Big Rock Brewery Inc. has reduced its earnings per share by 29% a year over the last three years. It achieved revenue growth of 6.3% over the last year.

Few shareholders would be pleased to read that EPS have declined. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Big Rock Brewery Inc. Been A Good Investment?

Big Rock Brewery Inc. has generated a total shareholder return of 23% 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...

While it's true that shareholders have owned decent returns, it's hard to overlook the lack of earnings growth and this makes us question whether these returns will continue. In the upcoming AGM, shareholders will get the opportunity to discuss any concerns with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

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 Big Rock Brewery (1 can't be ignored!) that you should be aware of before investing here.

Important note: Big Rock Brewery 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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