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Is Superior Plus Corp.'s (TSE:SPB) CEO Pay Justified?

Simply Wall St

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Luc Desjardins has been the CEO of Superior Plus Corp. (TSE:SPB) since 2011. 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 process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Superior Plus

How Does Luc Desjardins's Compensation Compare With Similar Sized Companies?

According to our data, Superior Plus Corp. has a market capitalization of CA$2.2b, and pays its CEO total annual compensation worth CA$4.2m. (This is based on the year to December 2018). That's just a smallish increase of 1.9% on last year. We think total compensation is more important but we note that the CEO salary is lower, at CA$920k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of CA$1.3b to CA$4.3b. The median total CEO compensation was CA$3.1m.

As you can see, Luc Desjardins is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Superior Plus Corp. is paying too much. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

The graphic below shows how CEO compensation at Superior Plus has changed from year to year.

TSX:SPB CEO Compensation, June 18th 2019

Is Superior Plus Corp. Growing?

Over the last three years Superior Plus Corp. has shrunk its earnings per share by an average of 57% per year (measured with a line of best fit). In the last year, its revenue is up 11%.

Few shareholders would be pleased to read that earnings per share are lower over three years. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.

Has Superior Plus Corp. Been A Good Investment?

Boasting a total shareholder return of 46% over three years, Superior Plus Corp. has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

We examined the amount Superior Plus Corp. pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

On the other hand, returns have been good, so the company is doing something right. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Superior Plus (free visualization of insider trades).

If you want to buy a stock that is better than Superior Plus, this free list of high return, low debt companies is a great place to look.

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.

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. Thank you for reading.