Here's Why Green Thumb Industries Inc.'s (CSE:GTII) CEO May Deserve A Raise

Shareholders will be pleased by the impressive results for Green Thumb Industries Inc. (CSE:GTII) recently and CEO Ben Kovler has played a key role. At the upcoming AGM on 28 June 2021, they will get a chance to hear the board review the company results, discuss future strategy and cast their vote on any resolutions such as executive remuneration. We think the CEO has done a pretty decent job and probably deserves a well-earned pay rise.

Check out our latest analysis for Green Thumb Industries

How Does Total Compensation For Ben Kovler Compare With Other Companies In The Industry?

At the time of writing, our data shows that Green Thumb Industries Inc. has a market capitalization of CA$7.9b, and reported total annual CEO compensation of US$1.7m for the year to December 2020. That's a notable decrease of 58% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$308k.

In comparison with other companies in the industry with market capitalizations ranging from CA$5.0b to CA$15b, the reported median CEO total compensation was US$11m. Accordingly, Green Thumb Industries pays its CEO under the industry median. Moreover, Ben Kovler also holds CA$656m worth of Green Thumb Industries 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	US$308k	US$295k	19%
Other	US$1.4m	US$3.7m	81%
Total Compensation	US$1.7m	US$4.0m	100%

Speaking on an industry level, nearly 70% of total compensation represents salary, while the remainder of 30% is other remuneration. Green Thumb Industries sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Green Thumb Industries Inc.'s Growth

Over the past three years, Green Thumb Industries Inc. has seen its earnings per share (EPS) grow by 16% per year. It achieved revenue growth of 123% over the last year.

This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term EPS improvement certainly points to the kind of growth we like to see. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Green Thumb Industries Inc. Been A Good Investment?

We think that the total shareholder return of 159%, over three years, would leave most Green Thumb Industries Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Given the improved performance, shareholders may be more forgiving of CEO compensation in the upcoming AGM. Seeing that earnings growth and share price performance seems to be on the right path, the more pressing focus for shareholders at the AGM may be how the board and management plans to turn the company into a sustainably profitable one.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 2 warning signs for Green Thumb Industries that investors should look into moving forward.

Important note: Green Thumb Industries 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.

If you're looking for stocks to buy, use the lowest-cost* platform that is rated #1 Overall by Barron’s, Interactive Brokers. Trade stocks, options, futures, forex, bonds and funds on 135 markets, all from a single integrated account. Promoted

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.
^*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.