How Much is Imperial Ginseng Products' (CVE:IGP) CEO Getting Paid?

This article will reflect on the compensation paid to Stephen McCoach who has served as CEO of Imperial Ginseng Products Ltd. (CVE:IGP) since 2006. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

See our latest analysis for Imperial Ginseng Products

How Does Total Compensation For Stephen McCoach Compare With Other Companies In The Industry?

At the time of writing, our data shows that Imperial Ginseng Products Ltd. has a market capitalization of CA$2.9m, and reported total annual CEO compensation of CA$362k for the year to June 2020. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at CA$332.7k constitutes the majority of total compensation received by the CEO.

On comparing similar-sized companies in the industry with market capitalizations below CA$254m, we found that the median total CEO compensation was CA$240k. This suggests that Stephen McCoach is paid more than the median for the industry. What's more, Stephen McCoach holds CA$927k worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, roughly 52% of total compensation represents salary and 48% is other remuneration. Imperial Ginseng Products pays out 92% of remuneration in the form of a salary, significantly higher than the industry average. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

A Look at Imperial Ginseng Products Ltd.'s Growth Numbers

Over the last three years, Imperial Ginseng Products Ltd. has shrunk its earnings per share by 112% per year. It saw its revenue drop 25% over the last year.

Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Imperial Ginseng Products Ltd. Been A Good Investment?

Given the total shareholder loss of 76% over three years, many shareholders in Imperial Ginseng Products Ltd. 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, Imperial Ginseng Products pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 4 warning signs for Imperial Ginseng Products you should be aware of, and 2 of them don't sit too well with us.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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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