This Is Why Shareholders May Want To Hold Back On A Pay Rise For Wall Financial Corporation's (TSE:WFC) CEO

By
Simply Wall St
Published
June 07, 2021
TSX:WFC
Source: Shutterstock

The disappointing performance at Wall Financial Corporation (TSE:WFC) will make some shareholders rather disheartened. The next AGM coming up on 14 June 2021 will be a chance for shareholders to have their concerns addressed by the board, challenge management on company strategy and vote on resolutions such as executive remuneration, which may help change the company's future prospects. From our analysis below, we think CEO compensation looks appropriate for now.

View our latest analysis for Wall Financial

How Does Total Compensation For Bruno Wall Compare With Other Companies In The Industry?

At the time of writing, our data shows that Wall Financial Corporation has a market capitalization of CA$578m, and reported total annual CEO compensation of CA$464k for the year to January 2021. Notably, that's a decrease of 54% over the year before. Notably, the salary which is CA$458.3k, represents most of the total compensation being paid.

On comparing similar companies from the same industry with market caps ranging from CA$241m to CA$966m, we found that the median CEO total compensation was CA$740k. In other words, Wall Financial pays its CEO lower than the industry median.

Component20212020Proportion (2021)
Salary CA$458k CA$1.0m 99%
Other CA$5.4k CA$7.0k 1%
Total CompensationCA$464k CA$1.0m100%

Talking in terms of the industry, salary represented approximately 56% of total compensation out of all the companies we analyzed, while other remuneration made up 44% of the pie. Wall Financial has gone down a largely traditional route, paying Bruno Wall a high salary, giving it preference over non-salary benefits. 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.

ceo-compensation
TSX:WFC CEO Compensation June 8th 2021

Wall Financial Corporation's Growth

Over the last three years, Wall Financial Corporation has shrunk its earnings per share by 65% per year. It saw its revenue drop 59% over the last year.

The decline in EPS is a bit concerning. 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 Wall Financial Corporation Been A Good Investment?

Since shareholders would have lost about 27% over three years, some Wall Financial Corporation investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Wall Financial pays its CEO a majority of compensation through a salary. Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for Wall Financial (1 doesn't sit too well with us!) that you should be aware of before investing here.

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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