Is Atlantic Power Corporation's (TSE:ATP) CEO Pay Justified?
In 2015 Jim Moore was appointed CEO of Atlantic Power Corporation (TSE:ATP). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.
View our latest analysis for Atlantic Power
How Does Jim Moore's Compensation Compare With Similar Sized Companies?
Our data indicates that Atlantic Power Corporation is worth CA$342m, and total annual CEO compensation was reported as US$2.1m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$575k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from US$100m to US$400m, we found the median CEO total compensation was US$685k.
Thus we can conclude that Jim Moore receives more in total compensation than the median of a group of companies in the same market, and of similar size to Atlantic Power Corporation. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
You can see a visual representation of the CEO compensation at Atlantic Power, below.
Is Atlantic Power Corporation Growing?
Over the last three years Atlantic Power Corporation has grown its earnings per share (EPS) by an average of 94% per year (using a line of best fit). Its revenue is down 8.2% over last year.
This demonstrates that the company has been improving recently. A good result. The lack of revenue growth isn't ideal, but it is the bottom line that counts most in business. Shareholders might be interested in this free visualization of analyst forecasts.
Has Atlantic Power Corporation Been A Good Investment?
Since shareholders would have lost about 11% over three years, some Atlantic Power Corporation shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
We compared the total CEO remuneration paid by Atlantic Power Corporation, and compared it to remuneration at a group of similar sized companies. Our data suggests that it pays above the median CEO pay within that group.
However, the earnings per share growth over three years is certainly impressive. On the other hand returns to investors over the same period have probably disappointed many. Considering the per share profit growth, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Atlantic Power (free visualization of insider trades).
Important note: Atlantic Power 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.
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