Is Willamette Valley Vineyards, Inc.’s (NASDAQ:WVVI) CEO Pay Fair?

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Jim Bernau has been the CEO of Willamette Valley Vineyards, Inc. (NASDAQ:WVVI) since 1988. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for Willamette Valley Vineyards

How Does Jim Bernau’s Compensation Compare With Similar Sized Companies?

According to our data, Willamette Valley Vineyards, Inc. has a market capitalization of US$34m, and pays its CEO total annual compensation worth US$521k. (This figure is for the year to 2017). While we always look at total compensation first, we note that the salary component is less, at US$260k. We examined a group of similar sized companies, with market capitalizations of below US$200m. The median CEO compensation in that group is US$300k.

As you can see, Jim Bernau is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Willamette Valley Vineyards, Inc. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see, below, how CEO compensation at Willamette Valley Vineyards has changed over time.

NASDAQCM:WVVI CEO Compensation February 12th 19
NASDAQCM:WVVI CEO Compensation February 12th 19

Is Willamette Valley Vineyards, Inc. Growing?

Willamette Valley Vineyards, Inc. has increased its earnings per share (EPS) by an average of 5.4% a year, over the last three years (using a line of best fit). It achieved revenue growth of 4.8% over the last year.

I’m not particularly impressed by the revenue growth, but the modest improvement in EPS is good. Considering these factors I’d say performance has been pretty decent, though not amazing. We don’t have analyst forecasts, but shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.

Has Willamette Valley Vineyards, Inc. Been A Good Investment?

Given the total loss of 0.4% over three years, many shareholders in Willamette Valley Vineyards, Inc. may be somewhat dissatisfied. Some shareholders might think the company shouldn’t be too generous with CEO compensation. However, we do note that the company has delivered an 8% positive return over the past 5 years.

In Summary…

We compared total CEO remuneration at Willamette Valley Vineyards, Inc. with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.

While we have not been overly impressed by the business performance, the shareholder returns, over three years, have been disappointing. Considering this, we have the opinion that the CEO pay is more on the generous side, than the modest side. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Willamette Valley Vineyards (free visualization of insider trades).

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.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.