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Medicure Inc. (CVE:MPH) has not performed well recently and CEO Albert Friesen will probably need to up their game. At the upcoming AGM on 21 June 2021, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. The data we present below explains why we think CEO compensation is not consistent with recent performance.
How Does Total Compensation For Albert Friesen Compare With Other Companies In The Industry?
At the time of writing, our data shows that Medicure Inc. has a market capitalization of CA$12m, and reported total annual CEO compensation of CA$331k for the year to December 2020. We note that's a small decrease of 4.5% on last year. Notably, the salary of CA$331k is the entirety of the CEO compensation.
For comparison, other companies in the industry with market capitalizations below CA$243m, reported a median total CEO compensation of CA$282k. From this we gather that Albert Friesen is paid around the median for CEOs in the industry. Moreover, Albert Friesen also holds CA$2.8m worth of Medicure stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 74% of total compensation represents salary and 26% is other remuneration. On a company level, Medicure prefers to reward its CEO through a salary, opting not to pay Albert Friesen through non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
Medicure Inc.'s Growth
Over the last three years, Medicure Inc. has shrunk its earnings per share by 97% per year. In the last year, its revenue is down 26%.
Few shareholders would be pleased to read that EPS have declined. 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. While we don't have analyst forecasts for the company, shareholders might want to examine this detailed historical graph of earnings, revenue and cash flow.
Has Medicure Inc. Been A Good Investment?
With a total shareholder return of -85% over three years, Medicure Inc. shareholders would by and large be disappointed. So shareholders would probably want the company to be less generous with CEO compensation.
Medicure pays CEO compensation exclusively through a salary, with non-salary compensation completely ignored. Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. That's why we did our research, and identified 3 warning signs for Medicure (of which 2 can't be ignored!) that you should know about in order to have a holistic understanding of the stock.
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.
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. 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.
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