Is Reitmans (Canada) Limited’s (TSE:RET.A) CEO Paid At A Competitive Rate?

The CEO of Reitmans (Canada) Limited (TSE:RET.A) is Jeremy Reitman. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Reitmans (Canada)

How Does Jeremy Reitman’s Compensation Compare With Similar Sized Companies?

Our data indicates that Reitmans (Canada) Limited is worth CA$207m, and total annual CEO compensation is CA$270k. (This figure is for the year to February 2018). Notably, the salary of CA$270k is the vast majority of the CEO compensation. When we examined a selection of companies with market caps ranging from CA$134m to CA$535m, we found the median CEO total compensation was CA$813k.

A first glance this seems like a real positive for shareholders, since Jeremy Reitman is paid less than the average total compensation paid by similar sized companies. While this is a good thing, you’ll need to understand the business better before you can form an opinion.

You can see a visual representation of the CEO compensation at Reitmans (Canada), below.

TSX:RET.A CEO Compensation, April 12th 2019
TSX:RET.A CEO Compensation, April 12th 2019

Is Reitmans (Canada) Limited Growing?

Over the last three years Reitmans (Canada) Limited has grown its earnings per share (EPS) by an average of 45% per year (using a line of best fit). In the last year, its revenue is down -4.3%.

This shows that the company has improved itself over the last few years. Good news for shareholders. Revenue growth is a real positive for growth, but ultimately profits are more important. Although we don’t have analyst forecasts, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Reitmans (Canada) Limited Been A Good Investment?

Since shareholders would have lost about 7.3% over three years, some Reitmans (Canada) Limited shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

It looks like Reitmans (Canada) Limited pays its CEO less than similar sized companies. Many would consider this to indicate that the pay is modest since the business is growing. Unfortunately, some shareholders may be disappointed with their returns, given the company’s performance over the last three years. We’re not critical of the remuneration Jeremy Reitman receives, but it would be good to see improved returns to shareholders before the remuneration grows too much.

When I see fairly low remuneration, combined with earnings per share growth, but without big share price gains, it makes me want to research the potential for future gains. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Reitmans (Canada).

Important note: Reitmans (Canada) 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.