Is Maple Leaf Foods Inc.’s (TSE:MFI) CEO Pay Fair?

Michael McCain has been the CEO of Maple Leaf Foods Inc. (TSE:MFI) since 1999. 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. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Maple Leaf Foods

How Does Michael McCain’s Compensation Compare With Similar Sized Companies?

According to our data, Maple Leaf Foods Inc. has a market capitalization of CA$2.8b, and paid its CEO total annual compensation worth CA$6.7m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at CA$1.1m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of CA$1.3b to CA$4.3b. The median total CEO compensation was CA$2.9m.

As you can see, Michael McCain is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Maple Leaf Foods Inc. is paying too much. We can better assess whether the pay is overly generous by looking into the underlying business performance.

You can see a visual representation of the CEO compensation at Maple Leaf Foods, below.

TSX:MFI CEO Compensation, March 3rd 2020
TSX:MFI CEO Compensation, March 3rd 2020

Is Maple Leaf Foods Inc. Growing?

Maple Leaf Foods Inc. has reduced its earnings per share by an average of 27% a year, over the last three years (measured with a line of best fit). Its revenue is up 13% over last year.

Unfortunately, earnings per share have trended lower over the last three years. And while it’s good to see some good revenue growth recently, the growth isn’t really fast enough for me to put aside my concerns around earnings. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.

Has Maple Leaf Foods Inc. Been A Good Investment?

Given the total loss of 22% over three years, many shareholders in Maple Leaf Foods Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

We compared total CEO remuneration at Maple Leaf Foods Inc. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.

We think many shareholders would be underwhelmed with the business growth over the last three years. Just as bad, share price gains for investors have failed to materialize, over the same period. Some might well form the view that the CEO is paid too generously! Shareholders may want to check for free if Maple Leaf Foods insiders are buying or selling shares.

Important note: Maple Leaf Foods 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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