We Discuss Why Morguard Corporation's (TSE:MRC) CEO Compensation May Be Closely Reviewed

The results at Morguard Corporation (TSE:MRC) have been quite disappointing recently and CEO Kuldip Sahi bears some responsibility for this. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 05 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. We present the case why we think CEO compensation is out of sync with company performance.

View our latest analysis for Morguard

How Does Total Compensation For Kuldip Sahi Compare With Other Companies In The Industry?

According to our data, Morguard Corporation has a market capitalization of CA$1.4b, and paid its CEO total annual compensation worth CA$2.6m over the year to December 2020. We note that's a decrease of 14% compared to last year. While we always look at total compensation first, our analysis shows that the salary component is less, at CA$1.2m.

For comparison, other companies in the same industry with market capitalizations ranging between CA$496m and CA$2.0b had a median total CEO compensation of CA$1.9m. This suggests that Kuldip Sahi is paid more than the median for the industry. What's more, Kuldip Sahi holds CA$824m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2020	2019	Proportion (2020)
Salary	CA$1.2m	CA$1.2m	46%
Other	CA$1.4m	CA$1.8m	54%
Total Compensation	CA$2.6m	CA$3.0m	100%

On an industry level, around 54% of total compensation represents salary and 46% is other remuneration. It's interesting to note that Morguard allocates a smaller portion of compensation to salary in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

Morguard Corporation's Growth

Over the last three years, Morguard Corporation has shrunk its earnings per share by 59% per year. In the last year, its revenue is down 17%.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. 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 Morguard Corporation Been A Good Investment?

With a three year total loss of 24% for the shareholders, Morguard Corporation would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

Not only have shareholders not seen a favorable return on their investment, but the business hasn't performed well either. Few shareholders would be willing to award the CEO with a pay raise. 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.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 2 warning signs for Morguard that you should be aware of before investing.

Switching gears from Morguard, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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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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