How Should Investors Feel About Metro's (TSE:MRU) CEO Remuneration?

Eric La Fleche has been the CEO of Metro Inc. (TSE:MRU) since 2008, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Metro.

View our latest analysis for Metro

How Does Total Compensation For Eric La Fleche Compare With Other Companies In The Industry?

Our data indicates that Metro Inc. has a market capitalization of CA$13b, and total annual CEO compensation was reported as CA$5.1m for the year to September 2020. That is, the compensation was roughly the same as last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CA$1.0m.

In comparison with other companies in the industry with market capitalizations over CA$10b , the reported median total CEO compensation was CA$11m. That is to say, Eric La Fleche is paid under the industry median. Moreover, Eric La Fleche also holds CA$14m worth of Metro stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Talking in terms of the industry, salary represented approximately 20% of total compensation out of all the companies we analyzed, while other remuneration made up 80% of the pie. Metro is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Metro Inc.'s Growth Numbers

Over the last three years, Metro Inc. has shrunk its earnings per share by 25% per year. In the last year, its revenue is up 8.5%.

The decline in EPS is a bit concerning. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation 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 Metro Inc. Been A Good Investment?

Boasting a total shareholder return of 35% over three years, Metro Inc. has done well by shareholders. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.

In Summary...

As we touched on above, Metro Inc. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. And while EPS growth is in the red, shareholder returns have been great over the last three years, so that's certainly a bright spot! Although we'd like to see positive EPS growth, we'd argue the remuneration is modest, based on our observations.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We've identified 1 warning sign for Metro that investors should be aware of in a dynamic business environment.

Important note: Metro is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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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. 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. Simply Wall St has no position in any stocks mentioned.
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