Does Sleep Country Canada Holdings Inc.’s (TSE:ZZZ) CEO Pay Matter?

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David Friesema has been the CEO of Sleep Country Canada Holdings Inc. (TSE:ZZZ) since 2014. 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.

Check out our latest analysis for Sleep Country Canada Holdings

How Does David Friesema’s Compensation Compare With Similar Sized Companies?

According to our data, Sleep Country Canada Holdings Inc. has a market capitalization of CA$693m, and pays its CEO total annual compensation worth CA$1.5m. (This number is for the twelve months until December 2018). That’s less than last year. We think total compensation is more important but we note that the CEO salary is lower, at CA$550k. When we examined a selection of companies with market caps ranging from CA$268m to CA$1.1b, we found the median CEO total compensation was CA$1.4m.

So David Friesema receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn’t tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

You can see a visual representation of the CEO compensation at Sleep Country Canada Holdings, below.

TSX:ZZZ CEO Compensation, June 5th 2019
TSX:ZZZ CEO Compensation, June 5th 2019

Is Sleep Country Canada Holdings Inc. Growing?

Over the last three years Sleep Country Canada Holdings Inc. has grown its earnings per share (EPS) by an average of 30% per year (using a line of best fit). It achieved revenue growth of 6.5% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s also good to see modest revenue growth, suggesting the underlying business is healthy. It could be important to check this free visual depiction of what analysts expect for the future.

Has Sleep Country Canada Holdings Inc. Been A Good Investment?

Since shareholders would have lost about 19% over three years, some Sleep Country Canada Holdings Inc. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

David Friesema is paid around the same as most CEOs of similar size companies.

We’d say the company can boast of its EPS growth, but we find the returns over the last three years to be lacking. We’d be surprised if shareholders want to see a pay rise for the CEO, but we’d stop short of calling their pay too generous. Whatever your view on compensation, you might want to check if insiders are buying or selling Sleep Country Canada Holdings shares (free trial).

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.

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.