Why Big Rock Brewery's (TSE:BR) CEO Pay Matters

Wayne Arsenault became the CEO of Big Rock Brewery Inc. (TSE:BR) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Big Rock Brewery pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

View our latest analysis for Big Rock Brewery

How Does Total Compensation For Wayne Arsenault Compare With Other Companies In The Industry?

At the time of writing, our data shows that Big Rock Brewery Inc. has a market capitalization of CA$34m, and reported total annual CEO compensation of CA$666k for the year to December 2019. 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$258k.

In comparison with other companies in the industry with market capitalizations under CA$257m, the reported median total CEO compensation was CA$336k. Hence, we can conclude that Wayne Arsenault is remunerated higher than the industry median. Moreover, Wayne Arsenault also holds CA$176k worth of Big Rock Brewery stock directly under their own name.

Speaking on an industry level, nearly 39% of total compensation represents salary, while the remainder of 61% is other remuneration. Big Rock Brewery is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

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

Big Rock Brewery Inc. has reduced its earnings per share by 38% a year over the last three years. In the last year, its revenue is down 4.1%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.

Has Big Rock Brewery Inc. Been A Good Investment?

Given the total shareholder loss of 27% over three years, many shareholders in Big Rock Brewery Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we noted earlier, Big Rock Brewery pays its CEO higher than the norm for similar-sized companies belonging to the same industry. This doesn't look good against shareholder returns, which have been negative for the past three years. Add to that declining EPS growth, and you have the perfect recipe for shareholder irritation. Understandably, the company's shareholders might have some questions about the CEO's remuneration, given the disappointing performance.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We identified 2 warning signs for Big Rock Brewery (1 is potentially serious!) that you should be aware of before investing here.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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