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Here's Why It's Unlikely That Medical Facilities Corporation's (TSE:DR) CEO Will See A Pay Rise This Year
Medical Facilities Corporation (TSE:DR) has not performed well recently and CEO Rob Horrar will probably need to up their game. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 13 May 2021. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. From our analysis, we think CEO compensation may need a review in light of the recent performance.
Check out our latest analysis for Medical Facilities
Comparing Medical Facilities Corporation's CEO Compensation With the industry
Our data indicates that Medical Facilities Corporation has a market capitalization of CA$226m, and total annual CEO compensation was reported as US$1.4m for the year to December 2020. We note that's an increase of 67% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$515k.
For comparison, other companies in the same industry with market capitalizations ranging between CA$122m and CA$488m had a median total CEO compensation of US$962k. This suggests that Rob Horrar is paid more than the median for the industry. Furthermore, Rob Horrar directly owns CA$181k worth of shares in the company.
Component | 2020 | 2019 | Proportion (2020) |
Salary | US$515k | US$492k | 38% |
Other | US$836k | US$319k | 62% |
Total Compensation | US$1.4m | US$810k | 100% |
Talking in terms of the industry, salary represented approximately 43% of total compensation out of all the companies we analyzed, while other remuneration made up 57% of the pie. Medical Facilities sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Medical Facilities Corporation's Growth
Over the last three years, Medical Facilities Corporation has shrunk its earnings per share by 20% per year. Its revenue is down 8.6% over the previous year.
Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Medical Facilities Corporation Been A Good Investment?
Few Medical Facilities Corporation shareholders would feel satisfied with the return of -31% over three years. So shareholders would probably want the company to be less generous with CEO compensation.
To Conclude...
Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, management will get a chance to explain how they plan to get the business back on track and address the concerns from investors.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We did our research and spotted 4 warning signs for Medical Facilities that investors should look into moving forward.
Important note: Medical Facilities 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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About TSX:DR
Medical Facilities
Through its subsidiaries, owns and operates specialty hospitals and ambulatory surgery center in the United States.
Excellent balance sheet and good value.