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Is Major Drilling Group International Inc.'s (TSE:MDI) CEO Being Overpaid?

Simply Wall St

Denis Larocque became the CEO of Major Drilling Group International Inc. (TSE:MDI) in 2015. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Major Drilling Group International

How Does Denis Larocque's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Major Drilling Group International Inc. has a market cap of CA$471m, and reported total annual CEO compensation of CA$910k for the year to April 2019. That's just a smallish increase of 2.3% on last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at CA$382k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of CA$261m to CA$1.0b. The median total CEO compensation was CA$1.4m.

A first glance this seems like a real positive for shareholders, since Denis Larocque is paid less than the average total compensation paid by similar sized companies. However, before we heap on the praise, we should delve deeper to understand business performance.

The graphic below shows how CEO compensation at Major Drilling Group International has changed from year to year.

TSX:MDI CEO Compensation, October 29th 2019

Is Major Drilling Group International Inc. Growing?

On average over the last three years, Major Drilling Group International Inc. has grown earnings per share (EPS) by 46% each year (using a line of best fit). In the last year, its revenue is up 13%.

This demonstrates that the company has been improving recently. A good result. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. It could be important to check this free visual depiction of what analysts expect for the future.

Has Major Drilling Group International Inc. Been A Good Investment?

Given the total loss of 15% over three years, many shareholders in Major Drilling Group International Inc. are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.

In Summary...

It appears that Major Drilling Group International Inc. remunerates its CEO below most similar sized companies.

Many would consider this to indicate that the pay is modest since the business is growing. Unfortunately, some shareholders may be disappointed with their returns, given the company's performance over the last three years. So while we don't think, Denis Larocque is paid too much, shareholders may hope that business performance translates to investment returns before pay rises are given out. When I see fairly low remuneration, combined with earnings per share growth, but without big share price gains, it makes me want to research the potential for future gains. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Major Drilling Group International (free visualization of insider trades).

Important note: Major Drilling Group International 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.

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.