Stock Analysis

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

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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.

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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.

Component20192018Proportion (2019)
Salary CA$258k CA$250k 39%
Other CA$408k CA$406k 61%
Total CompensationCA$666k CA$656k100%

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.

TSX:BR CEO Compensation December 24th 2020

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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