Tom Mullane has been the CEO of Freehold Royalties Ltd. (TSE:FRU) since 2013. 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. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Tom Mullane’s Compensation Compare With Similar Sized Companies?
According to our data, Freehold Royalties Ltd. has a market capitalization of CA$1.1b, and pays its CEO total annual compensation worth CA$409k. (This number is for the twelve months until December 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at CA$153k. When we examined a selection of companies with market caps ranging from CA$535m to CA$2.1b, we found the median CEO total compensation was CA$1.9m.
Most shareholders would consider it a positive that Tom Mullane takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see a visual representation of the CEO compensation at Freehold Royalties, below.
Is Freehold Royalties Ltd. Growing?
Over the last three years Freehold Royalties Ltd. has grown its earnings per share (EPS) by an average of 94% per year (using a line of best fit). Its revenue is down -4.1% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. While it would be good to see revenue growth, profits matter more in the end. It could be important to check this free visual depiction of what analysts expect for the future.
Has Freehold Royalties Ltd. Been A Good Investment?
With a three year total loss of 1.9%, Freehold Royalties Ltd. would certainly have some dissatisfied shareholders. So shareholders would probably think the company shouldn’t be too generous with CEO compensation.
Freehold Royalties Ltd. is currently paying its CEO below what is normal for companies of its size. Many would consider this to indicate that the pay is modest since the business is growing. Few would deny that the total shareholder return over the last three years could have been a lot better. So while we don’t think, Tom Mullane is paid too much, shareholders may hope that business performance translates to investment returns before pay rises are given out.
When I see fairly low remuneration, combined with earnings per share growth, but without big share price gains, it makes me want to research the potential for future gains. Whatever your view on compensation, you might want to check if insiders are buying or selling Freehold Royalties shares (free trial).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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