Here's Why Shareholders May Want To Be Cautious With Increasing Conifex Timber Inc.'s (TSE:CFF) CEO Pay Packet

In the past three years, the share price of Conifex Timber Inc. (TSE:CFF) has struggled to grow and now shareholders are sitting on a loss. Per share earnings growth is also poor, despite revenues growing. The AGM coming up on 22 June 2021 will be an opportunity for shareholders to have their concerns addressed by the board and for them to exercise their influence on management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders might be hesitant about approving a raise at the moment.

Check out our latest analysis for Conifex Timber

How Does Total Compensation For Ken Shields Compare With Other Companies In The Industry?

At the time of writing, our data shows that Conifex Timber Inc. has a market capitalization of CA$96m, and reported total annual CEO compensation of CA$1.4m for the year to December 2020. That's a notable increase of 30% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CA$512k.

In comparison with other companies in the industry with market capitalizations under CA$244m, the reported median total CEO compensation was CA$347k. Hence, we can conclude that Ken Shields is remunerated higher than the industry median. Moreover, Ken Shields also holds CA$2.4m worth of Conifex Timber stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component	2020	2019	Proportion (2020)
Salary	CA$512k	CA$646k	37%
Other	CA$862k	CA$411k	63%
Total Compensation	CA$1.4m	CA$1.1m	100%

Speaking on an industry level, nearly 37% of total compensation represents salary, while the remainder of 63% is other remuneration. Although there is a difference in how total compensation is set, Conifex Timber more or less reflects the market in terms of setting the salary. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Conifex Timber Inc.'s Growth

Conifex Timber Inc. has reduced its earnings per share by 45% a year over the last three years. In the last year, its revenue is up 19%.

The reduction in EPS, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. These two metrics are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Conifex Timber Inc. Been A Good Investment?

With a total shareholder return of -64% over three years, Conifex Timber Inc. shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.

In Summary...

The loss to shareholders over the past three years is certainly concerning and possibly has something to do with the fact that the company's earnings haven't grown. Shareholders will get the chance at the upcoming AGM to question the board on key matters, such as CEO remuneration or any other issues they might have and revisit their investment thesis with regards to the company.

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 Conifex Timber you should be aware of, and 2 of them can't be ignored.

Important note: Conifex Timber 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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