In 2009 Marc Parent was appointed CEO of CAE Inc. (TSE:CAE). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Marc Parent’s Compensation Compare With Similar Sized Companies?
According to our data, CAE Inc. has a market capitalization of CA$11b, and paid its CEO total annual compensation worth CA$7.5m over the year to March 2019. While we always look at total compensation first, we note that the salary component is less, at CA$1m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We looked at a group of companies with market capitalizations from CA$5.3b to CA$16b, and the median CEO total compensation was CA$4.9m.
It would therefore appear that CAE Inc. pays Marc Parent more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn’t mean the remuneration is too high. 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 CAE has changed from year to year.
Is CAE Inc. Growing?
On average over the last three years, CAE Inc. has grown earnings per share (EPS) by 11% each year (using a line of best fit). It achieved revenue growth of 22% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. Shareholders might be interested in this free visualization of analyst forecasts.
Has CAE Inc. Been A Good Investment?
Boasting a total shareholder return of 105% over three years, CAE Inc. has done well by shareholders. 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.
We compared the total CEO remuneration paid by CAE Inc., and compared it to remuneration at a group of similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
However we must not forget that the EPS growth has been very strong over three years. Even better, returns to shareholders have been plentiful, over the same time period. As a result of this good performance, the CEO remuneration may well be quite reasonable. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at CAE.
Important note: CAE 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.
If you spot an error that warrants correction, please contact the editor at email@example.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.
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