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Is Transition Metals Corp.'s (CVE:XTM) CEO Paid Enough Relative To Peers?

Simply Wall St

Scott McLean became the CEO of Transition Metals Corp. (CVE:XTM) in 2009. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Next, we'll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.

See our latest analysis for Transition Metals

How Does Scott McLean's Compensation Compare With Similar Sized Companies?

Our data indicates that Transition Metals Corp. is worth CA$4.7m, and total annual CEO compensation is CA$133k. (This is based on the year to August 2018). It is worth noting that the CEO compensation consists almost entirely of the salary, worth CA$133k. We took a group of companies with market capitalizations below CA$267m, and calculated the median CEO total compensation to be CA$142k.

So Scott McLean receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.

You can see a visual representation of the CEO compensation at Transition Metals, below.

TSXV:XTM CEO Compensation, April 15th 2019

Is Transition Metals Corp. Growing?

On average over the last three years, Transition Metals Corp. has shrunk earnings per share by 48% each year (measured with a line of best fit). It saw its revenue drop -28% over the last year.

Sadly for shareholders, earnings per share are actually down, over three years. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. We don't have analyst forecasts, but you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Transition Metals Corp. Been A Good Investment?

Since shareholders would have lost about 19% over three years, some Transition Metals Corp. shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

Remuneration for Scott McLean is close enough to the median pay for a CEO of a similar sized company .

The company isn't growing EPS, and shareholder returns have been disappointing. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves. So you may want to check if insiders are buying Transition Metals shares with their own money (free access).

Important note: Transition Metals 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.