Stock Analysis

Atrium Mortgage Investment Corporation's (TSE:AI) CEO Compensation Looks Acceptable To Us And Here's Why

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The performance at Atrium Mortgage Investment Corporation (TSE:AI) has been rather lacklustre of late and shareholders may be wondering what CEO Rob Goodall is planning to do about this. At the next AGM coming up on 13 May 2021, they can influence managerial decision making through voting on resolutions, including executive remuneration. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. In our opinion, CEO compensation does not look excessive and we discuss why.

Check out our latest analysis for Atrium Mortgage Investment

How Does Total Compensation For Rob Goodall Compare With Other Companies In The Industry?

At the time of writing, our data shows that Atrium Mortgage Investment Corporation has a market capitalization of CA$584m, and reported total annual CEO compensation of CA$947k for the year to December 2020. That's mostly flat as compared to the prior year's compensation. While we always look at total compensation first, our analysis shows that the salary component is less, at CA$400k.

For comparison, other companies in the same industry with market capitalizations ranging between CA$245m and CA$981m had a median total CEO compensation of CA$1.7m. That is to say, Rob Goodall is paid under the industry median. What's more, Rob Goodall holds CA$10.0m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary CA$400k CA$400k 42%
Other CA$547k CA$546k 58%
Total CompensationCA$947k CA$946k100%

Speaking on an industry level, nearly 34% of total compensation represents salary, while the remainder of 66% is other remuneration. Atrium Mortgage Investment pays out 42% of remuneration in the form of a salary, significantly higher than the industry average. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

TSX:AI CEO Compensation May 6th 2021

A Look at Atrium Mortgage Investment Corporation's Growth Numbers

Over the last three years, Atrium Mortgage Investment Corporation has not seen its earnings per share change much, though they have deteriorated slightly. In the last year, its revenue changed by just 0.4%.

The lack of EPS growth is certainly uninspiring. And the flat revenue hardly impresses. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Atrium Mortgage Investment Corporation Been A Good Investment?

Most shareholders would probably be pleased with Atrium Mortgage Investment Corporation for providing a total return of 36% 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.

To Conclude...

Although shareholders would be quite happy with the returns they have earned on their initial investment, earnings have failed to grow and this could mean these strong returns may not continue. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 1 warning sign for Atrium Mortgage Investment that investors should look into moving forward.

Important note: Atrium Mortgage Investment is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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