It Looks Like Magellan Aerospace Corporation's (TSE:MAL) CEO May Expect Their Salary To Be Put Under The Microscope

The results at Magellan Aerospace Corporation (TSE:MAL) have been quite disappointing recently and CEO Phil Underwood bears some responsibility for this. Shareholders will be interested in what the board will have to say about turning performance around at the next AGM on 04 May 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. The data we present below explains why we think CEO compensation is not consistent with recent performance.

Check out our latest analysis for Magellan Aerospace

Comparing Magellan Aerospace Corporation's CEO Compensation With the industry

Our data indicates that Magellan Aerospace Corporation has a market capitalization of CA$613m, and total annual CEO compensation was reported as CA$919k for the year to December 2020. Notably, that's an increase of 40% over the year before. We note that the salary of CA$525.0k makes up a sizeable portion of the total compensation received by the CEO.

On comparing similar companies from the same industry with market caps ranging from CA$248m to CA$992m, we found that the median CEO total compensation was CA$1.1m. This suggests that Magellan Aerospace remunerates its CEO largely in line with the industry average.

Component	2020	2019	Proportion (2020)
Salary	CA$525k	CA$470k	57%
Other	CA$394k	CA$186k	43%
Total Compensation	CA$919k	CA$657k	100%

On an industry level, roughly 72% of total compensation represents salary and 28% is other remuneration. Magellan Aerospace pays a modest slice of remuneration through salary, as compared to the broader industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Magellan Aerospace Corporation's Growth Numbers

Over the last three years, Magellan Aerospace Corporation has shrunk its earnings per share by 69% per year. In the last year, its revenue is down 27%.

Overall this is not a very positive result for shareholders. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Magellan Aerospace Corporation Been A Good Investment?

Few Magellan Aerospace Corporation shareholders would feel satisfied with the return of -39% over three years. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

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've identified 3 warning signs for Magellan Aerospace that investors should be aware of in a dynamic business environment.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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