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This article will reflect on the compensation paid to Andrew Hider who has served as CEO of ATS Automation Tooling Systems Inc. (TSE:ATA) since 2017. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing ATS Automation Tooling Systems Inc.'s CEO Compensation With the industry
Our data indicates that ATS Automation Tooling Systems Inc. has a market capitalization of CA$2.0b, and total annual CEO compensation was reported as CA$4.0m for the year to March 2020. Notably, that's a decrease of 21% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at CA$935k.
In comparison with other companies in the industry with market capitalizations ranging from CA$1.3b to CA$4.2b, the reported median CEO total compensation was CA$5.9m. That is to say, Andrew Hider is paid under the industry median. Moreover, Andrew Hider also holds CA$4.2m worth of ATS Automation Tooling Systems stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, roughly 60% of total compensation represents salary and 40% is other remuneration. It's interesting to note that ATS Automation Tooling Systems allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at ATS Automation Tooling Systems Inc.'s Growth Numbers
ATS Automation Tooling Systems Inc. saw earnings per share stay pretty flat over the last three years. It achieved revenue growth of 4.4% over the last year.
Its a bit disappointing to see that the company has failed to grow its EPS. The fairly low revenue growth fails to impress given that the EPS is down. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has ATS Automation Tooling Systems Inc. Been A Good Investment?
We think that the total shareholder return of 36%, over three years, would leave most ATS Automation Tooling Systems Inc. shareholders smiling. 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.
As we noted earlier, ATS Automation Tooling Systems pays its CEO lower than the norm for similar-sized companies belonging to the same industry. And while EPS growth is negative, shareholder returns have been healthy recently. Although we'd like to see positive EPS growth, we'd argue the remuneration is modest, based on our observations.
While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We did our research and spotted 2 warning signs for ATS Automation Tooling Systems that investors should look into moving forward.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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