This article will reflect on the compensation paid to Michael Smith who has served as CEO of Scully Royalty Ltd. (NYSE:SRL) since 2017. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Scully Royalty.
See our latest analysis for Scully Royalty
How Does Total Compensation For Michael Smith Compare With Other Companies In The Industry?
Our data indicates that Scully Royalty Ltd. has a market capitalization of US$63m, and total annual CEO compensation was reported as CA$867k for the year to December 2019. That's a fairly small increase of 5.2% over the previous year. In particular, the salary of CA$556.4k, makes up a huge portion of the total compensation being paid to the CEO.
In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was CA$491k. This suggests that Michael Smith is paid more than the median for the industry. Moreover, Michael Smith also holds US$545k worth of Scully Royalty stock directly under their own name.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | CA$556k | CA$543k | 64% |
| Other | CA$310k | CA$281k | 36% |
| Total Compensation | CA$867k | CA$824k | 100% |
On an industry level, around 14% of total compensation represents salary and 86% is other remuneration. It's interesting to note that Scully Royalty pays out a greater portion of remuneration through salary, compared to the industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at Scully Royalty Ltd.'s Growth Numbers
Scully Royalty Ltd. has seen its earnings per share (EPS) increase by 53% a year over the past three years. In the last year, its revenue is down 33%.
Shareholders would be glad to know that the company has improved itself over the last few years. While it would be good to see revenue growth, profits matter more in the end. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Scully Royalty Ltd. Been A Good Investment?
Given the total shareholder loss of 35% over three years, many shareholders in Scully Royalty Ltd. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
As we noted earlier, Scully Royalty pays its CEO higher than the norm for similar-sized companies belonging to the same industry. But the company has impressed with its EPS growth, but it's disappointing to see negative shareholder returns over the same period. Considering overall performance, we can't say Michael is underpaid, in fact compensation is definitely on the higher side.
CEO compensation can have a massive impact on performance, but it's just one element. We've identified 2 warning signs for Scully Royalty that investors should be aware of in a dynamic business environment.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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.
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About NYSE:SRL
Scully Royalty
Operates as an iron ore mining company in the Americas, Africa, Canada, Asia, and Europe.
Excellent balance sheet and slightly overvalued.
