Galen Weston became the CEO of Loblaw Companies Limited (TSE:L) in 2017, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.

View our latest analysis for Loblaw Companies

Comparing Loblaw Companies Limited's CEO Compensation With the industry

Our data indicates that Loblaw Companies Limited has a market capitalization of CA$23b, and total annual CEO compensation was reported as CA$3.7m for the year to December 2019. We note that's a decrease of 10% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CA$480k.

For comparison, other companies in the industry with market capitalizations above CA$11b, reported a median total CEO compensation of CA$9.9m. Accordingly, Loblaw Companies pays its CEO under the industry median. What's more, Galen Weston holds CA$31m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Talking in terms of the industry, salary represented approximately 20% of total compensation out of all the companies we analyzed, while other remuneration made up 80% of the pie. In Loblaw Companies' case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Loblaw Companies Limited's Growth

Over the last three years, Loblaw Companies Limited has shrunk its earnings per share by 3.0% per year. In the last year, its revenue is up 5.7%.

Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Loblaw Companies Limited Been A Good Investment?

Loblaw Companies Limited has generated a total shareholder return of 28% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary...

As previously discussed, Galen is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. While we have not been overly impressed by shareholder returns, EPS growth has been negative over the last three years, a real headache for the company. We can't categorize CEO compensation as high, but shareholders might object to a raise at this stage, considering overall poor performance.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Loblaw Companies that investors should think about before committing capital to this stock.

Switching gears from Loblaw Companies, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.