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Does TeraGo Inc.'s (TSE:TGO) CEO Pay Matter?

Simply Wall St

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Tony Ciciretto has been the CEO of TeraGo Inc. (TSE:TGO) since 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. 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.

Check out our latest analysis for TeraGo

How Does Tony Ciciretto's Compensation Compare With Similar Sized Companies?

Our data indicates that TeraGo Inc. is worth CA$176m, and total annual CEO compensation is CA$787k. (This figure is for the year to December 2018). That's below the compensation, last year. While we always look at total compensation first, we note that the salary component is less, at CA$450k. We took a group of companies with market capitalizations below CA$263m, and calculated the median CEO total compensation to be CA$152k.

Thus we can conclude that Tony Ciciretto receives more in total compensation than the median of a group of companies in the same market, and of similar size to TeraGo Inc.. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

The graphic below shows how CEO compensation at TeraGo has changed from year to year.

TSX:TGO CEO Compensation, June 26th 2019

Is TeraGo Inc. Growing?

TeraGo Inc. has reduced its earnings per share by an average of 18% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is down -3.5%.

Sadly for shareholders, earnings per share are actually down, over three years. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.

Has TeraGo Inc. Been A Good Investment?

Boasting a total shareholder return of 116% over three years, TeraGo Inc. has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

We examined the amount TeraGo Inc. pays its CEO, and compared it to the amount paid by similar sized companies. Our data suggests that it pays above the median CEO pay within that group.

Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.

However, we can't argue with the strong returns to shareholders, over the same time period. Considering this, shareholders are probably not too worried about the CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling TeraGo shares (free trial).

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.