We Think Shareholders May Consider Being More Generous With Diversified Royalty Corp.'s (TSE:DIV) CEO Compensation Package

Key Insights

• Diversified Royalty to hold its Annual General Meeting on 20th of June
• Salary of CA$345.0k is part of CEO Sean Morrison's total remuneration
• The total compensation is 46% less than the average for the industry
• Diversified Royalty's EPS grew by 51% over the past three years while total shareholder return over the past three years was 24%

The decent performance at Diversified Royalty Corp. (TSE:DIV) recently will please most shareholders as they go into the AGM coming up on 20th of June. They will probably be more interested in hearing the board discuss future initiatives to further improve the business as they vote on resolutions such as executive remuneration. Here is our take on why we think CEO compensation is fair and may even warrant a raise.

View our latest analysis for Diversified Royalty

Comparing Diversified Royalty Corp.'s CEO Compensation With The Industry

Our data indicates that Diversified Royalty Corp. has a market capitalization of CA$455m, and total annual CEO compensation was reported as CA$2.3m for the year to December 2023. Notably, that's an increase of 20% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CA$345k.

For comparison, other companies in the Canadian Specialty Retail industry with market capitalizations ranging between CA$275m and CA$1.1b had a median total CEO compensation of CA$4.2m. In other words, Diversified Royalty pays its CEO lower than the industry median. What's more, Sean Morrison holds CA$5.0m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2023	2022	Proportion (2023)
Salary	CA$345k	CA$345k	15%
Other	CA$1.9m	CA$1.6m	85%
Total Compensation	CA$2.3m	CA$1.9m	100%

On an industry level, around 54% of total compensation represents salary and 46% is other remuneration. It's interesting to note that Diversified Royalty allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Diversified Royalty Corp.'s Growth Numbers

Diversified Royalty Corp.'s earnings per share (EPS) grew 51% per year over the last three years. Its revenue is up 24% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Diversified Royalty Corp. Been A Good Investment?

Diversified Royalty Corp. has served shareholders reasonably well, with a total return of 24% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

While the company seems to be headed in the right direction performance-wise, there's always room for improvement. Assuming the business continues to grow at a good clip, few shareholders would raise any objections to the CEO's remuneration. Rather, investors would more likely want to engage on discussions related to key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 3 warning signs for Diversified Royalty you should be aware of, and 2 of them are a bit unpleasant.

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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.