TSXV:WRI Income Statement Jan 29th 18
Is WRI overpaying the CEO?
While no standard benchmark exists, as remuneration should account for specific factors of the company and market, we can estimate a high-level yardstick to see if WRI is an outlier. This exercise helps investors ask the right question about Williams’s incentive alignment. On average, a Canadian small-cap is worth around $345M, produces earnings of $24M, and remunerates its CEO at roughly $770,000 per year. Typically I would use earnings and market cap to account for variations in performance, however, WRI’s negative earnings reduces the usefulness of my formula. Analyzing the range of remuneration for small-cap executives, it seems like Williams is being paid within the bounds of reasonableness. Overall, even though WRI is unprofitable, it seems like the CEO’s pay is fair.
Next Steps:
My conclusion is that Williams is not being overpaid. But your role as a shareholder should not end here. As above, this is a relatively simplistic calculation using high-level benchmarket. Proactive shareholders should question their representatives (i.e. the board of directors) how they think about the CEO’s incentive alignment with shareholders and how they balance this with retention and reward. If you have not done so already, I highly recommend you to complete your research by taking a look at the following:
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.