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How Does RenoWorks Software's (CVE:RW) CEO Pay Compare With Company Performance?
This article will reflect on the compensation paid to Doug Vickerson who has served as CEO of RenoWorks Software Inc. (CVE:RW) since 2006. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
See our latest analysis for RenoWorks Software
How Does Total Compensation For Doug Vickerson Compare With Other Companies In The Industry?
At the time of writing, our data shows that RenoWorks Software Inc. has a market capitalization of CA$16m, and reported total annual CEO compensation of CA$182k for the year to December 2019. That's mostly flat as compared to the prior year's compensation. Notably, the salary which is CA$168.5k, represents most of the total compensation being paid.
On comparing similar-sized companies in the industry with market capitalizations below CA$262m, we found that the median total CEO compensation was CA$218k. This suggests that RenoWorks Software remunerates its CEO largely in line with the industry average. Furthermore, Doug Vickerson directly owns CA$1.2m worth of shares in the company, implying that they are deeply invested in the company's success.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | CA$169k | CA$161k | 92% |
| Other | CA$14k | CA$22k | 8% |
| Total Compensation | CA$182k | CA$183k | 100% |
On an industry level, around 79% of total compensation represents salary and 21% is other remuneration. RenoWorks Software is paying a higher share of its remuneration through a salary in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
RenoWorks Software Inc.'s Growth
RenoWorks Software Inc. has seen its earnings per share (EPS) increase by 12% a year over the past three years. Its revenue is up 7.0% over the last year.
This demonstrates that the company has been improving recently and is good news for the shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. We don't have analyst forecasts, but you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has RenoWorks Software Inc. Been A Good Investment?
Most shareholders would probably be pleased with RenoWorks Software Inc. for providing a total return of 70% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
In Summary...
As previously discussed, Doug is compensated close to the median for companies of its size, and which belong to the same industry. The company is growing EPS and total shareholder returns have been pleasing. Although the pay is close to the industry median, overall performance is excellent, so we don't think the CEO is paid too generously. In fact, shareholders might even think the CEO deserves a raise as a reward due to the fantastic returns generated.
CEO pay is simply one of the many factors that need to be considered while examining business performance. We identified 3 warning signs for RenoWorks Software (1 is potentially serious!) that you should be aware of before investing here.
Important note: RenoWorks Software is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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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. 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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.
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About TSXV:RW
RenoWorks Software
Develops and distributes digital visualization software for the renovation and new home construction sectors in the United States, Canada, and internationally.
Adequate balance sheet and slightly overvalued.
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