How Is Saputo's (TSE:SAP) CEO Paid Relative To Peers?

This article will reflect on the compensation paid to Lino Saputo who has served as CEO of Saputo Inc. (TSE:SAP) since 2004. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Saputo.

See our latest analysis for Saputo

Comparing Saputo Inc.'s CEO Compensation With the industry

At the time of writing, our data shows that Saputo Inc. has a market capitalization of CA$15b, and reported total annual CEO compensation of CA$4.0m for the year to March 2020. That's a notable increase of 9.7% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CA$1.3m.

On comparing similar companies in the industry with market capitalizations above CA$10b, we found that the median total CEO compensation was CA$16m. This suggests that Lino Saputo is paid below the industry median. What's more, Lino Saputo holds CA$3.6m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

On an industry level, around 52% of total compensation represents salary and 48% is other remuneration. It's interesting to note that Saputo allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

Saputo Inc.'s Growth

Over the last three years, Saputo Inc. has shrunk its earnings per share by 13% per year. The trailing twelve months of revenue was pretty much the same as the prior period.

The decline in EPS is a bit concerning. And the flat revenue is seriously uninspiring. 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 Saputo Inc. Been A Good Investment?

Given the total shareholder loss of 1.6% over three years, many shareholders in Saputo Inc. are probably rather dissatisfied, to say the least. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As we noted earlier, Saputo pays its CEO lower than the norm for similar-sized companies belonging to the same industry. While we are quite underwhelmed with EPS growth, the shareholder returns over the past three years have also failed to impress us. We can't say the CEO compensation is high, but shareholders will be cold to a bump at this stage, considering negative investor returns.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Saputo that investors should think about before committing capital to this stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity 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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