Is Cargojet Inc.’s (TSE:CJT) CEO Paid Enough Relative To Peers?

The CEO of Cargojet Inc. (TSE:CJT) is Ajay Virmani. 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 – 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.

Check out our latest analysis for Cargojet

How Does Ajay Virmani’s Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Cargojet Inc. has a market cap of CA$1.5b, and reported total annual CEO compensation of CA$9.4m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at CA$975k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. We examined companies with market caps from CA$522m to CA$2.1b, and discovered that the median CEO total compensation of that group was CA$2.2m.

Thus we can conclude that Ajay Virmani receives more in total compensation than the median of a group of companies in the same market, and of similar size to Cargojet Inc.. However, this doesn’t necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

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

TSX:CJT CEO Compensation, January 21st 2020
TSX:CJT CEO Compensation, January 21st 2020

Is Cargojet Inc. Growing?

Cargojet Inc. has increased its earnings per share (EPS) by an average of 46% a year, over the last three years (using a line of best fit). Its revenue is up 8.9% over last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It’s nice to see a little revenue growth, as this is consistent with healthy business conditions. It could be important to check this free visual depiction of what analysts expect for the future.

Has Cargojet Inc. Been A Good Investment?

Most shareholders would probably be pleased with Cargojet Inc. for providing a total return of 152% over three years. 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.

In Summary…

We compared the total CEO remuneration paid by Cargojet Inc., and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

However we must not forget that the EPS growth has been very strong over three years. In addition, shareholders have done well over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. Shareholders may want to check for free if Cargojet insiders are buying or selling shares.

Important note: Cargojet 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 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.

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