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In 2001 Heather Reisman was appointed CEO of Indigo Books & Music Inc. (TSE:IDG). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does Heather Reisman’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Indigo Books & Music Inc. has a market cap of CA$280m, and is paying total annual CEO compensation of CA$763k. (This figure is for the year to 2018). Notably, the salary of CA$750k is the vast majority of the CEO compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of CA$133m to CA$531m. The median total CEO compensation was CA$843k.
So Heather Reisman is paid around the average of the companies we looked at. Although this fact alone doesn’t tell us a great deal, it becomes more relevant when considered against the business performance.
The graphic below shows how CEO compensation at Indigo Books & Music has changed from year to year.
Is Indigo Books & Music Inc. Growing?
On average over the last three years, Indigo Books & Music Inc. has shrunk earnings per share by 56% each year (measured with a line of best fit). The trailing twelve months of revenue was pretty much the same as the prior period.
Unfortunately, earnings per share have trended lower over the last three years. And the flat revenue hardly impresses. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has Indigo Books & Music Inc. Been A Good Investment?
Since shareholders would have lost about 26% over three years, some Indigo Books & Music Inc. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
Heather Reisman is paid around what is normal the leaders of comparable size companies.
After looking at EPS and total shareholder returns, it’s certainly hard to argue the company has performed well, since both metrics are down. Few would argue that it’s wise for the company to pay any more, before returns improve. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Indigo Books & Music.
Important note: Indigo Books & Music may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at firstname.lastname@example.org.