Want to participate in a short research study? Help shape the future of investing tools and receive a $20 prize!
L. Thomson became the CEO of Finning International Inc. (TSE:FTT) in 2013. 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. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does L. Thomson’s Compensation Compare With Similar Sized Companies?
According to our data, Finning International Inc. has a market capitalization of CA$4.0b, and pays its CEO total annual compensation worth CA$6.1m. (This figure is for the year to December 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at CA$927k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of CA$2.6b to CA$8.4b. The median total CEO compensation was CA$3.9m.
As you can see, L. Thomson is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Finning International Inc. is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.
You can see, below, how CEO compensation at Finning International has changed over time.
Is Finning International Inc. Growing?
On average over the last three years, Finning International Inc. has grown earnings per share (EPS) by 96% each year (using a line of best fit). It achieved revenue growth of 12% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. It could be important to check this free visual depiction of what analysts expect for the future.
Has Finning International Inc. Been A Good Investment?
Most shareholders would probably be pleased with Finning International Inc. for providing a total return of 42% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
We compared total CEO remuneration at Finning International Inc. with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
However we must not forget that the EPS growth has been very strong over three years. Even better, returns to shareholders have been plentiful, over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Finning International.
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 firstname.lastname@example.org. 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.