Is Martinrea International Inc.’s (TSE:MRE) CEO Paid At A Competitive Rate?
In 2014 Pat D’Eramo was appointed CEO of Martinrea International Inc. (TSE:MRE). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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.
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How Does Pat D’Eramo’s Compensation Compare With Similar Sized Companies?
Our data indicates that Martinrea International Inc. is worth CA$1.0b, and total annual CEO compensation is CA$3.8m. (This is based on the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at CA$818k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of CA$533m to CA$2.1b. The median total CEO compensation was CA$2.0m.
As you can see, Pat D’Eramo is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Martinrea International Inc. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Martinrea International has changed from year to year.
Is Martinrea International Inc. Growing?
Over the last three years Martinrea International Inc. has grown its earnings per share (EPS) by an average of 27% per year (using a line of best fit). In the last year, its revenue is down -4.9%.
This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end.
You might want to check this free visual report on analyst forecasts for future earnings.
Has Martinrea International Inc. Been A Good Investment?
With a total shareholder return of 31% over three years, Martinrea International Inc. shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
In Summary…
We compared total CEO remuneration at Martinrea International Inc. with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.
However, the earnings per share growth over three years is certainly impressive. Looking at the same time period, we think that the shareholder returns are respectable. So, considering the EPS growth we do not wish to criticize the level of CEO compensation, though we’d recommend further research on management. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Martinrea International (free visualization of insider trades).
Or you could feast your eyes on this interactive graph depicting past earnings, cash flow and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
