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Is IMAX Corporation (NYSE:IMAX) Overpaying Its CEO?

Simply Wall St

In 2009 Rich Gelfond was appointed CEO of IMAX Corporation (NYSE:IMAX). 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 we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for IMAX

How Does Rich Gelfond's Compensation Compare With Similar Sized Companies?

According to our data, IMAX Corporation has a market capitalization of US$1.3b, and paid its CEO total annual compensation worth US$6.3m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$1.2m. 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 US$1.0b to US$3.2b. The median total CEO compensation was US$3.9m.

Thus we can conclude that Rich Gelfond receives more in total compensation than the median of a group of companies in the same market, and of similar size to IMAX Corporation. However, this doesn't necessarily mean the pay is too high. 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 IMAX has changed over time.

NYSE:IMAX CEO Compensation, November 4th 2019
NYSE:IMAX CEO Compensation, November 4th 2019

Is IMAX Corporation Growing?

Over the last three years IMAX Corporation has grown its earnings per share (EPS) by an average of 8.3% per year (using a line of best fit). It saw its revenue drop 2.7% over the last year.

I would argue that the lack of revenue growth in the last year is less than ideal, but I'm happy with the EPS growth. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. It could be important to check this free visual depiction of what analysts expect for the future.

Has IMAX Corporation Been A Good Investment?

Since shareholders would have lost about 30% over three years, some IMAX Corporation shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

We compared the total CEO remuneration paid by IMAX Corporation, and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

While we have not been overly impressed by the business performance, the shareholder returns, over three years, have been disappointing. Although we'd stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. Whatever your view on compensation, you might want to check if insiders are buying or selling IMAX shares (free trial).

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

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.