Is Bombardier Inc. (TSE:BBD.B) Overpaying Its CEO?

In 2015 Alain Bellemare was appointed CEO of Bombardier Inc. (TSE:BBD.B). First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Bombardier

How Does Alain Bellemare's Compensation Compare With Similar Sized Companies?

Our data indicates that Bombardier Inc. is worth CA$3.9b, and total annual CEO compensation was reported as US$11m for the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.1m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$2.0b to US$6.4b. The median total CEO compensation was US$2.9m.

Thus we can conclude that Alain Bellemare receives more in total compensation than the median of a group of companies in the same market, and of similar size to Bombardier 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, below, how CEO compensation at Bombardier has changed over time.

Is Bombardier Inc. Growing?

Bombardier Inc. has increased its earnings per share (EPS) by an average of 126% a year, over the last three years (using a line of best fit). It saw its revenue drop 5.8% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. While it would be good to see revenue growth, profits matter more in the end. It could be important to check this free visual depiction of what analysts expect for the future.

Has Bombardier Inc. Been A Good Investment?

With a three year total loss of 13%, Bombardier Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We compared total CEO remuneration at Bombardier Inc. with the amount paid at companies with a similar market capitalization. Our data suggests that it pays above the median CEO pay within that group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. However, the returns to investors are far less impressive, over the same period. Considering the per share profit growth, but keeping in mind the weak returns, we'd need more time to form a view on CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling Bombardier shares (free trial).

Important note: Bombardier 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.