A Quick Analysis On North West's (TSE:NWC) CEO Compensation

This article will reflect on the compensation paid to Edward Kennedy who has served as CEO of The North West Company Inc. (TSE:NWC) since 1997. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for North West.

View our latest analysis for North West

Comparing The North West Company Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that The North West Company Inc. has a market capitalization of CA$1.7b, and reported total annual CEO compensation of CA$5.1m for the year to January 2020. Notably, that's an increase of 53% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at CA$843k.

In comparison with other companies in the industry with market capitalizations ranging from CA$1.3b to CA$4.2b, the reported median CEO total compensation was CA$8.7m. This suggests that Edward Kennedy is paid below the industry median. Furthermore, Edward Kennedy directly owns CA$14m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 20% of total compensation represents salary and 80% is other remuneration. It's interesting to note that North West allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at The North West Company Inc.'s Growth Numbers

The North West Company Inc.'s earnings per share (EPS) grew 15% per year over the last three years. It achieved revenue growth of 12% 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 decent revenue growth in the last year, suggesting the business is healthy and growing. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has The North West Company Inc. Been A Good Investment?

The North West Company Inc. has generated a total shareholder return of 28% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

In Summary...

As previously discussed, Edward is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. But over the last three years, EPS growth has been growing rapidly, which is a great sign for the company. Unfortunately, although shareholder returns are growing, they haven't impressed us as much in comparison, over the same period. Shareholder returns could be better but we're pleased with the positive EPS growth. So it's fair to say Edward has done quite well despite modest compensation and shareholders might not be averse to a raise.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 2 warning signs for North West that investors should look into moving forward.

Switching gears from North West, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.