Stock Analysis

Our View On Diamond Estates Wines & Spirits' (CVE:DWS) CEO Pay

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J. Souter has been the CEO of Diamond Estates Wines & Spirits Inc. (CVE:DWS) since 2013, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Diamond Estates Wines & Spirits.

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How Does Total Compensation For J. Souter Compare With Other Companies In The Industry?

According to our data, Diamond Estates Wines & Spirits Inc. has a market capitalization of CA$29m, and paid its CEO total annual compensation worth CA$334k over the year to March 2020. Notably, that's an increase of 15% over the year before. Notably, the salary which is CA$220.0k, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations under CA$254m, the reported median total CEO compensation was CA$334k. From this we gather that J. Souter is paid around the median for CEOs in the industry. Moreover, J. Souter also holds CA$176k worth of Diamond Estates Wines & Spirits stock directly under their own name.

Component20202019Proportion (2020)
Salary CA$220k CA$220k 66%
Other CA$114k CA$71k 34%
Total CompensationCA$334k CA$291k100%

Talking in terms of the industry, salary represented approximately 39% of total compensation out of all the companies we analyzed, while other remuneration made up 61% of the pie. Diamond Estates Wines & Spirits is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

TSXV:DWS CEO Compensation January 14th 2021

A Look at Diamond Estates Wines & Spirits Inc.'s Growth Numbers

Over the last three years, Diamond Estates Wines & Spirits Inc. has shrunk its earnings per share by 62% per year. In the last year, its revenue is down 3.5%.

The decline in EPS is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Diamond Estates Wines & Spirits Inc. Been A Good Investment?

Given the total shareholder loss of 50% over three years, many shareholders in Diamond Estates Wines & Spirits Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we noted earlier, Diamond Estates Wines & Spirits pays its CEO in line with similar-sized companies belonging to the same industry. On the other hand, EPS growth and total shareholder return have been negative for the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 2 warning signs for Diamond Estates Wines & Spirits that investors should think about before committing capital to this stock.

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