Why Becker Milk's (TSE:BEK.B) CEO Pay Matters

The CEO of The Becker Milk Company Limited (TSE:BEK.B) is Geoffrey W. Pottow, and this article examines the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Becker Milk.

See our latest analysis for Becker Milk

How Does Total Compensation For Geoffrey W. Pottow Compare With Other Companies In The Industry?

According to our data, The Becker Milk Company Limited has a market capitalization of CA$23m, and paid its CEO total annual compensation worth CA$215k over the year to April 2020. This means that the compensation hasn't changed much from last year. We note that the salary portion, which stands at CA$200.0k constitutes the majority of total compensation received by the CEO.

For comparison, other companies in the industry with market capitalizations below CA$254m, reported a median total CEO compensation of CA$300k. So it looks like Becker Milk compensates Geoffrey W. Pottow in line with the median for the industry.

Talking in terms of the industry, salary represented approximately 53% of total compensation out of all the companies we analyzed, while other remuneration made up 47% of the pie. Becker Milk is paying a higher share of its remuneration through a salary in comparison to the overall industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

The Becker Milk Company Limited's Growth

Over the last three years, The Becker Milk Company Limited has shrunk its earnings per share by 33% per year. In the last year, its revenue is down 4.5%.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-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 The Becker Milk Company Limited Been A Good Investment?

The Becker Milk Company Limited has generated a total shareholder return of 8.1% over three years, so most shareholders wouldn't be too disappointed. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

As we touched on above, The Becker Milk Company Limited is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. According to our analysis, Becker Milk is suffering from uninspiring EPS growth, and even though shareholder returns are stable, they are hardly impressive. This doesn't compare well with CEO compensation, which is close to the industry median. Considering all of this, we can't say the CEO is underpaid, and moving forward shareholders will likely want to see higher growth to justify any raise.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 5 warning signs for Becker Milk (1 is a bit unpleasant!) 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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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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