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Should You Worry About K-Bro Linen Inc.'s (TSE:KBL) CEO Pay Cheque?

Simply Wall St

Linda McCurdy has been the CEO of K-Bro Linen Inc. (TSE:KBL) since 2000. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for K-Bro Linen

How Does Linda McCurdy's Compensation Compare With Similar Sized Companies?

Our data indicates that K-Bro Linen Inc. is worth CA$441m, and total annual CEO compensation was reported as CA$1.9m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at CA$521k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of CA$263m to CA$1.1b. The median total CEO compensation was CA$1.3m.

It would therefore appear that K-Bro Linen Inc. pays Linda McCurdy 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. 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 K-Bro Linen has changed from year to year.

TSX:KBL CEO Compensation, January 29th 2020

Is K-Bro Linen Inc. Growing?

On average over the last three years, K-Bro Linen Inc. has shrunk earnings per share by 33% each year (measured with a line of best fit). Its revenue is up 9.4% over last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has K-Bro Linen Inc. Been A Good Investment?

K-Bro Linen Inc. has generated a total shareholder return of 11% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

We examined the amount K-Bro Linen Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

We think many shareholders would be underwhelmed with the business growth over the last three years. And shareholder returns are decent but not great. So we think more research is needed, but we don't think the CEO underpaid. Whatever your view on compensation, you might want to check if insiders are buying or selling K-Bro Linen shares (free trial).

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

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.