TSXV:SDC Income Statement Nov 29th 17
Is SDC’s CEO overpaid relative to the market?
Though there is no cookie-cutter approach, since remuneration should be tailored to the specific company and market, we can fashion a high-level benchmark to see if SDC deviates substantially from its peers. This exercise can help shareholders ask the right question about Posescu’s incentive alignment. Generally, a Canadian small-cap has a value of $345M, produces earnings of $24M, and pays its CEO circa $770,000 per year. Normally I would look at market cap and earnings as a proxy for performance, however, SDC’s negative earnings reduces the effectiveness of this method. Given the range of pay for small-cap executives, it seems like Posescu is remunerated sensibly relative to peers. Putting everything together, even though SDC is unprofitable, it seems like the CEO’s pay is sound.
What this means for you:
Are you a shareholder? Hopefully this article has given you insight on how shareholders should think about SDC’s governance policies such as CEO pay. As an investor, you have the right to understand how the board thinks about management incentives, and also the right to vote for and against substantial CEO pay changes. Governance is a big factor in investing, and I encourage you to dig deeper into those that represent your voice on the board. To find out more about SDC’s governance, look through our infographic report of the company’s board and management.
Are you a potential investor? Whether Posescu is over or underpaid should not be a deciding factor whether or not you invest in SDC. However, the way the company is governed and policies, such as remuneration, are structured, are important considerations for an investor. The best place to start is to understand how well SDC is placed financially. To research more about these fundamentals, I recommend you check out our simple infographic report on SDC’s financial metrics.
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To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.