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This article will reflect on the compensation paid to Don Bubar who has served as CEO of Avalon Advanced Materials Inc. (TSE:AVL) since 1995. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Avalon Advanced Materials Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Avalon Advanced Materials Inc. has a market capitalization of CA$31m, and reported total annual CEO compensation of CA$222k for the year to August 2020. We note that's a decrease of 33% compared to last year. We note that the salary portion, which stands at CA$206.3k constitutes the majority of total compensation received by the CEO.
For comparison, other companies in the industry with market capitalizations below CA$260m, reported a median total CEO compensation of CA$154k. Hence, we can conclude that Don Bubar is remunerated higher than the industry median. Moreover, Don Bubar also holds CA$658k worth of Avalon Advanced Materials stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 89% of total compensation represents salary and 11% is other remuneration. Avalon Advanced Materials is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. 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 Avalon Advanced Materials Inc.'s Growth Numbers
Over the past three years, Avalon Advanced Materials Inc. has seen its earnings per share (EPS) grow by 35% per year. Its revenue is up 1,099% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. 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 Avalon Advanced Materials Inc. Been A Good Investment?
Since shareholders would have lost about 25% over three years, some Avalon Advanced Materials Inc. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
As we noted earlier, Avalon Advanced Materials pays its CEO higher than the norm for similar-sized companies belonging to the same industry. However, we must not forget that the EPS growth has been very strong, but it's disappointing to see negative shareholder returns over the same period. Although we'd stop short of calling it inappropriate, we think Don is earning a very handsome sum.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 5 warning signs for Avalon Advanced Materials you should be aware of, and 2 of them are significant.
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.
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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