Yahoo Finance Most Shareholders Will Probably Find That The Compensation For Leon's Furniture Limited's (TSE:LNF) CEO Is Reasonable
Key Insights
Leon's Furniture will host its Annual General Meeting on 8th of May
Total pay for CEO Mike Walsh includes CA$675.0k salary
The overall pay is 57% below the industry average
Leon's Furniture's total shareholder return over the past three years was 15% while its EPS was down 0.09% over the past three years
Performance at Leon's Furniture Limited (TSE:LNF) has been rather uninspiring recently and shareholders may be wondering how CEO Mike Walsh plans to fix this. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 8th of May. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. In our opinion, CEO compensation does not look excessive and we discuss why.
View our latest analysis for Leon's Furniture
Comparing Leon's Furniture Limited's CEO Compensation With The Industry
At the time of writing, our data shows that Leon's Furniture Limited has a market capitalization of CA$1.5b, and reported total annual CEO compensation of CA$2.3m for the year to December 2023. That's a notable decrease of 14% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CA$675k.
On comparing similar companies from the Canadian Specialty Retail industry with market caps ranging from CA$550m to CA$2.2b, we found that the median CEO total compensation was CA$5.4m. That is to say, Mike Walsh is paid under the industry median. Furthermore, Mike Walsh directly owns CA$4.2m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2023 | 2022 | Proportion (2023) |
Salary | CA$675k | CA$669k | 29% |
Other | CA$1.6m | CA$2.0m | 71% |
Total Compensation | CA$2.3m | CA$2.7m | 100% |
On an industry level, around 58% of total compensation represents salary and 42% is other remuneration. Leon's Furniture sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Leon's Furniture Limited's Growth
Over the last three years, Leon's Furniture Limited has not seen its earnings per share change much, though they have deteriorated slightly. It saw its revenue drop 2.5% over the last year.
Its a bit disappointing to see that the company has failed to grow its EPS. This is compounded by the fact revenue is actually down on last year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has Leon's Furniture Limited Been A Good Investment?
With a total shareholder return of 15% over three years, Leon's Furniture Limited shareholders would, in general, 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.
To Conclude...
Shareholder returns while positive, need to be looked at along with earnings, which have failed to grow and this could mean that the current momentum may not continue. Shareholders might want to question the board about these concerns, and revisit their investment thesis for the company.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 2 warning signs for Leon's Furniture that investors should look into moving forward.
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
