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Is Strad Inc.'s (TSE:SDY) CEO Pay Fair?

Simply Wall St

Andy Pernal has been the CEO of Strad Inc. (TSE:SDY) since 2012. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. 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.

View our latest analysis for Strad

How Does Andy Pernal's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Strad Inc. has a market cap of CA$98m, and reported total annual CEO compensation of CA$876k for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at CA$350k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations under CA$261m, and the median CEO total compensation was CA$216k.

It would therefore appear that Strad Inc. pays Andy Pernal more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. 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 Strad has changed over time.

TSX:SDY CEO Compensation, January 16th 2020

Is Strad Inc. Growing?

Over the last three years Strad Inc. has grown its earnings per share (EPS) by an average of 98% per year (using a line of best fit). Its revenue is up 7.0% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's nice to see a little revenue growth, as this is consistent with healthy business conditions. You might want to check this free visual report on analyst forecasts for future earnings.

Has Strad Inc. Been A Good Investment?

Given the total loss of 4.3% over three years, many shareholders in Strad Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared the total CEO remuneration paid by Strad Inc., and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. However, the returns to investors are far less impressive, over the same period. While EPS is positive, we'd say shareholders would want better returns before the CEO is paid much more. So you may want to check if insiders are buying Strad shares with their own money (free access).

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.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.