Should You Worry About Toromont Industries Ltd.’s (TSE:TIH) CEO Pay?

Scott Medhurst became the CEO of Toromont Industries Ltd. (TSE:TIH) in 2012. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. 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. This process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Toromont Industries

How Does Scott Medhurst’s Compensation Compare With Similar Sized Companies?

Our data indicates that Toromont Industries Ltd. is worth CA$5.4b, and total annual CEO compensation is CA$3.8m. (This is based on the year to December 2017). While we always look at total compensation first, we note that the salary component is less, at CA$765k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of CA$2.7b to CA$8.5b. The median total CEO compensation was CA$4.0m.

So Scott Medhurst is paid around the average of the companies we looked at. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance.

You can see a visual representation of the CEO compensation at Toromont Industries, below.

TSX:TIH CEO Compensation, March 22nd 2019
TSX:TIH CEO Compensation, March 22nd 2019

Is Toromont Industries Ltd. Growing?

Toromont Industries Ltd. has increased its earnings per share (EPS) by an average of 15% a year, over the last three years (using a line of best fit). Its revenue is up 49% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with EPS growth. This combo suggests a fast growing business. Shareholders might be interested in this free visualization of analyst forecasts.

Has Toromont Industries Ltd. Been A Good Investment?

Most shareholders would probably be pleased with Toromont Industries Ltd. for providing a total return of 108% over three years. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.

In Summary…

Scott Medhurst is paid around what is normal the leaders of comparable size companies.

Shareholders would surely be happy to see that shareholder returns have been great, and the earnings per share are up. So one could argue the CEO compensation is quite modest, if you consider company performance! CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Toromont Industries (free visualization of insider trades).

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

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.