John Sicard became the CEO of Kinaxis Inc. (TSE:KXS) in 2016, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for Kinaxis
How Does Total Compensation For John Sicard Compare With Other Companies In The Industry?
Our data indicates that Kinaxis Inc. has a market capitalization of CA$5.3b, and total annual CEO compensation was reported as US$3.0m for the year to December 2019. Notably, that's an increase of 47% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$397k.
For comparison, other companies in the same industry with market capitalizations ranging between CA$2.7b and CA$8.6b had a median total CEO compensation of US$3.0m. This suggests that Kinaxis remunerates its CEO largely in line with the industry average. Furthermore, John Sicard directly owns CA$46m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | US$397k | US$327k | 13% |
| Other | US$2.6m | US$1.7m | 87% |
| Total Compensation | US$3.0m | US$2.0m | 100% |
On an industry level, roughly 86% of total compensation represents salary and 14% is other remuneration. Kinaxis sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Kinaxis Inc.'s Growth
Kinaxis Inc.'s earnings per share (EPS) grew 25% per year over the last three years. In the last year, its revenue is up 33%.
This demonstrates that the company has been improving recently and is good news for the shareholders. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth we like to see. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Kinaxis Inc. Been A Good Investment?
We think that the total shareholder return of 190%, over three years, would leave most Kinaxis Inc. shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
As we touched on above, Kinaxis Inc. is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Few would be critical of the leadership, since returns have been juicy and earnings are moving in the right direction. So one could argue that CEO compensation is quite modest, if you consider company performance! Stockholders might even be okay with a bump in pay, seeing as how investor returns have been so strong.
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 3 warning signs for Kinaxis that investors should look into moving forward.
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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