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Is Fortis Inc.'s (TSE:FTS) CEO Overpaid Relative To Its Peers?

Simply Wall St

Barry Perry has been the CEO of Fortis Inc. (TSE:FTS) since 2015. First, this article will compare CEO compensation with compensation at other large companies. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Fortis

How Does Barry Perry's Compensation Compare With Similar Sized Companies?

Our data indicates that Fortis Inc. is worth CA$24b, and total annual CEO compensation was reported as CA$9.1m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at CA$1.3m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We took a group of companies with market capitalizations over CA$11b, and calculated the median CEO total compensation to be CA$9.1m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts - even though some are quite a bit bigger than others).

So Barry Perry is paid around the average of the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.

You can see a visual representation of the CEO compensation at Fortis, below.

TSX:FTS CEO Compensation, December 6th 2019

Is Fortis Inc. Growing?

Over the last three years Fortis Inc. has grown its earnings per share (EPS) by an average of 19% per year (using a line of best fit). In the last year, its revenue is up 4.4%.

This shows that the company has improved itself over the last few years. Good news for shareholders. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Shareholders might be interested in this free visualization of analyst forecasts.

Has Fortis Inc. Been A Good Investment?

Boasting a total shareholder return of 45% over three years, Fortis Inc. has done well by shareholders. 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.

In Summary...

Remuneration for Barry Perry is close enough to the median pay for a CEO of a large company .

The company is growing earnings per share and total shareholder returns have been pleasing. Although the pay is a normal amount, some shareholders probably consider it fair or modest, given the good performance of the stock. So you may want to check if insiders are buying Fortis shares with their own money (free access).

Important note: Fortis 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.

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. Thank you for reading.