Should You Worry About Magellan Aerospace Corporation’s (TSE:MAL) CEO Pay Cheque?

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Phil Underwood became the CEO of Magellan Aerospace Corporation (TSE:MAL) in 2015. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for Magellan Aerospace

How Does Phil Underwood’s Compensation Compare With Similar Sized Companies?

Our data indicates that Magellan Aerospace Corporation is worth CA$976m, and total annual CEO compensation is CA$811k. (This figure is for the year to December 2018). That’s a fairly small increase of 1.7% on year before. We think total compensation is more important but we note that the CEO salary is lower, at CA$452k. We examined companies with market caps from CA$536m to CA$2.1b, and discovered that the median CEO total compensation of that group was CA$2.1m.

Most shareholders would consider it a positive that Phil Underwood takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. While this is a good thing, you’ll need to understand the business better before you can form an opinion.

You can see, below, how CEO compensation at Magellan Aerospace has changed over time.

TSX:MAL CEO Compensation, June 7th 2019
TSX:MAL CEO Compensation, June 7th 2019

Is Magellan Aerospace Corporation Growing?

Magellan Aerospace Corporation has increased its earnings per share (EPS) by an average of 1.1% a year, over the last three years (using a line of best fit). In the last year, its revenue is up 4.2%.

I’m not particularly impressed by the revenue growth, but it is good to see modest EPS growth. Considering these factors I’d say performance has been pretty decent, though not amazing. Shareholders might be interested in this free visualization of analyst forecasts.

Has Magellan Aerospace Corporation Been A Good Investment?

Since shareholders would have lost about 8.4% over three years, some Magellan Aerospace Corporation shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.

In Summary…

It looks like Magellan Aerospace Corporation pays its CEO less than similar sized companies.

It’s well worth noting that while Phil Underwood is paid less than most company leaders (at similar sized companies), performance has been somewhat uninspiring, and total returns have been lacking. So while shareholders shouldn’t be overly concerned about CEO compensation, they would probably like to see improved shareholder returns before seeing a pay increase. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Magellan Aerospace (free visualization of insider trades).

If you want to buy a stock that is better than Magellan Aerospace, this free list of high return, low debt companies is a great place to look.

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.