Tom Mullane became the CEO of Freehold Royalties Ltd. (TSE:FRU) in 2013. First, this article will compare CEO compensation with compensation at similar sized companies. 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?
At the time of writing, our data says that Freehold Royalties Ltd. has a market cap of CA$828m, and reported total annual CEO compensation of CA$459k for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at CA$156k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from CA$529m to CA$2.1b, we found the median CEO total compensation was CA$2.0m.
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. Though positive, it's important we delve into the performance of the actual business. Shareholders might be interested in this free visualization of analyst forecasts.
The graphic below shows how CEO compensation at Freehold Royalties has changed from year to year.
Is Freehold Royalties Ltd. Growing?
On average over the last three years, Freehold Royalties Ltd. has grown earnings per share (EPS) by 77% each year (using a line of best fit). Its revenue is down 9.8% 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.
Has Freehold Royalties Ltd. Been A Good Investment?
Given the total loss of 36% over three years, many shareholders in Freehold Royalties Ltd. are probably rather dissatisfied, to say the least. It therefore might be upsetting for shareholders if the CEO were paid generously.
It appears that Freehold Royalties Ltd. remunerates its CEO below most similar sized companies.
Considering the underlying business is growing earnings, this would suggest the pay is modest. Unfortunately, some shareholders may be disappointed with their returns, given the company's performance over the last three years. We're not critical of the remuneration Tom Mullane receives, but it would be good to see improved returns to shareholders before the remuneration grows too much. In this case we may want to look deeper into the company. There are some real positives and we could see improved returns in the longer term. So you may want to check if insiders are buying Freehold Royalties shares with their own money (free access).
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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