Does Finning International Inc's (TSE:FTT) CEO Salary Compare Well With Others?

By
Simply Wall St
Published
November 27, 2018
TSX:FTT
Source: Shutterstock

L. Thomson became the CEO of Finning International Inc (TSE:FTT) in 2013. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.

View our latest analysis for Finning International

How Does L. Thomson's Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Finning International Inc has a market cap of CA$4.5b, and is paying total annual CEO compensation of CA$6.1m. (This number is for the twelve months until 2017). While we always look at total compensation first, we note that the salary component is less, at CA$927k. We looked at a group of companies with market capitalizations from CA$2.6b to CA$8.5b, and the median CEO compensation was CA$3.8m.

It would therefore appear that Finning International Inc pays L. Thomson 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. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.

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

TSX:FTT CEO Compensation November 27th 18
TSX:FTT CEO Compensation November 27th 18

Is Finning International Inc Growing?

On average over the last three years, Finning International Inc has grown earnings per share (EPS) by 69% each year. In the last year, its revenue is up 15%.

This demonstrates that the company has been improving recently. A good result. IThis sort of respectable year-on-year revenue growth is often seen at a healthy, growing business.

Shareholders might be interested in this free visualization of analyst forecasts. .

Has Finning International Inc Been A Good Investment?

Boasting a total shareholder return of 50% over three years, Finning International Inc has done well by shareholders. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

We compared total CEO remuneration at Finning International 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.

However, the earnings per share growth over three years is certainly impressive. On top of that, in the same period, returns to shareholders have been great. As a result of this good performance, the CEO remuneration may well be quite reasonable. So you may want to check if insiders are buying Finning International shares with their own money (free access).

Or you might prefer this data-rich interactive visualization of historic revenue and earnings.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.

Simply Wall St analyst Simply Wall St and Simply Wall St have no position in any of the companies mentioned. This article is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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