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Is IMAX Corporation's (NYSE:IMAX) CEO Salary Justified?

Simply Wall St
·4 mins read

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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.

See 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$675m, 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. We looked at a group of companies with market capitalizations from US$400m to US$1.6b, and the median CEO total compensation was US$3.2m.

Next, let's break down remuneration compositions to understand how the industry and company compare with each other. Talking in terms of the sector, salary represented approximately 31% of total compensation out of all the companies we analysed, while other remuneration made up 69% of the pie. Non-salary compensation represents a greater slice of the remuneration pie for IMAX, in sharp contrast to the overall sector.

As you can see, Rich Gelfond is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean IMAX Corporation is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance. You can see a visual representation of the CEO compensation at IMAX, below.

NYSE:IMAX CEO Compensation April 19th 2020
NYSE:IMAX CEO Compensation April 19th 2020

Is IMAX Corporation Growing?

Over the last three years IMAX Corporation has seen earnings per share (EPS) move in a positive direction by an average of 40% per year (using a line of best fit). In the last year, its revenue is up 5.7%.

This shows that the company has improved itself over the last few years. Good news for shareholders. 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 IMAX Corporation Been A Good Investment?

Given the total loss of 65% over three years, many shareholders in IMAX Corporation are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

We examined the amount IMAX Corporation pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. However, the returns to investors are far less impressive, over the same period. Considering positive per-share earnings movement, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. Looking into other areas, we've picked out 1 warning sign for IMAX that investors should think about before committing capital to this stock.

Important note: IMAX 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.