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How Should Investors React To ATS Automation Tooling Systems Inc.'s (TSE:ATA) CEO Pay?

Simply Wall St

Andrew Hider has been the CEO of ATS Automation Tooling Systems Inc. (TSE:ATA) since 2017. 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 - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.

See our latest analysis for ATS Automation Tooling Systems

How Does Andrew Hider's Compensation Compare With Similar Sized Companies?

Our data indicates that ATS Automation Tooling Systems Inc. is worth CA$1.7b, and total annual CEO compensation is CA$5.1m. (This number is for the twelve months until March 2019). That's just a smallish increase of 7.4% on last year. While we always look at total compensation first, we note that the salary component is less, at CA$844k. When we examined a selection of companies with market caps ranging from CA$1.3b to CA$4.2b, we found the median CEO total compensation was CA$3.0m.

Thus we can conclude that Andrew Hider receives more in total compensation than the median of a group of companies in the same market, and of similar size to ATS Automation Tooling Systems Inc.. However, this doesn't necessarily mean the pay is too high. 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 ATS Automation Tooling Systems, below.

TSX:ATA CEO Compensation, September 16th 2019

Is ATS Automation Tooling Systems Inc. Growing?

On average over the last three years, ATS Automation Tooling Systems Inc. has grown earnings per share (EPS) by 27% each year (using a line of best fit). Its revenue is up 12% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see decent revenue growth in the last year, suggesting the business is healthy and growing. You might want to check this free visual report on analyst forecasts for future earnings.

Has ATS Automation Tooling Systems Inc. Been A Good Investment?

Boasting a total shareholder return of 75% over three years, ATS Automation Tooling Systems Inc. has done well by shareholders. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

We examined the amount ATS Automation Tooling Systems Inc. pays its CEO, and compared it to the amount paid by similar sized companies. 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. On top of that, in the same period, returns to shareholders have been great. As a result of this good performance, the CEO remuneration may well be quite reasonable. Whatever your view on compensation, you might want to check if insiders are buying or selling ATS Automation Tooling Systems 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.