Pat D'Eramo became the CEO of Martinrea International Inc. (TSE:MRE) in 2014. 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 - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
How Does Pat D'Eramo's Compensation Compare With Similar Sized Companies?
Our data indicates that Martinrea International Inc. is worth CA$1.2b, and total annual CEO compensation was reported as CA$4.3m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at CA$818k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of CA$527m to CA$2.1b. The median total CEO compensation was CA$2.2m.
It would therefore appear that Martinrea International Inc. pays Pat D'Eramo more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Martinrea International has changed from year to year.
Is Martinrea International Inc. Growing?
Martinrea International Inc. has increased its earnings per share (EPS) by an average of 19% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 7.1%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Shareholders might be interested in this free visualization of analyst forecasts.
Has Martinrea International Inc. Been A Good Investment?
I think that the total shareholder return of 79%, over three years, would leave most Martinrea International Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
We compared total CEO remuneration at Martinrea International Inc. with the amount paid at companies with a similar market capitalization. We found that it pays well over the median amount paid in the benchmark group.
However, the earnings per share growth over three years is certainly impressive. On top of that, in the same period, returns to shareholders have been great. So, considering this good performance, the CEO compensation may be quite appropriate. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Martinrea International.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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