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Is Canadian Western Bank's (TSE:CWB) CEO Paid Enough Relative To Peers?

Chris Fowler became the CEO of Canadian Western Bank (TSE:CWB) in 2013. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Canadian Western Bank

How Does Chris Fowler's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Canadian Western Bank has a market cap of CA$1.7b, and reported total annual CEO compensation of CA$3.1m for the year to October 2019. While we always look at total compensation first, we note that the salary component is less, at CA$774k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined companies with market caps from CA$564m to CA$2.3b, and discovered that the median CEO total compensation of that group was CA$2.4m.

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Next, let's break down remuneration compositions to understand how the industry and company compare with each other. On an industry level, roughly 12% of total compensation represents salary and 88% is other remuneration. Canadian Western Bank pays out 25% of aggregate payment in the shape of a salary, which is significantly higher than the industry average.

So Chris Fowler receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance. You can see, below, how CEO compensation at Canadian Western Bank has changed over time.

TSX:CWB CEO Compensation May 16th 2020
TSX:CWB CEO Compensation May 16th 2020

Is Canadian Western Bank Growing?

Canadian Western Bank has seen earnings per share (EPS) move positively by an average of 13% a year, over the last three years (using a line of best fit). Its revenue is up 5.9% 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. Shareholders might be interested in this free visualization of analyst forecasts.

Has Canadian Western Bank Been A Good Investment?

With a three year total loss of 16%, Canadian Western Bank would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Chris Fowler is paid around the same as most CEOs of similar size companies.

We'd say the company can boast of its EPS growth, but we cannot say the same about the lacklustre shareholder returns (over the last three years). Considering the improvement in earnings per share, one could argue that the CEO pay is appropriate, albeit not too low. CEO compensation is an important area to keep your eyes on, but we've also identified 2 warning signs for Canadian Western Bank (1 is a bit concerning!) that you should be aware of before investing here.

Important note: Canadian Western Bank may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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.