Here's Why It's Unlikely That Melcor Developments Ltd.'s (TSE:MRD) CEO Will See A Pay Rise This Year

The results at Melcor Developments Ltd. (TSE:MRD) have been quite disappointing recently and CEO Darin Rayburn 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 20 May 2021. It would also be an opportunity for shareholders to influence management through voting on company resolutions such as executive remuneration, which could impact the firm significantly. From our analysis, we think CEO compensation may need a review in light of the recent performance.

View our latest analysis for Melcor Developments

Comparing Melcor Developments Ltd.'s CEO Compensation With the industry

Our data indicates that Melcor Developments Ltd. has a market capitalization of CA$433m, and total annual CEO compensation was reported as CA$1.1m for the year to December 2020. Notably, that's an increase of 18% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CA$426k.

For comparison, other companies in the same industry with market capitalizations ranging between CA$242m and CA$968m had a median total CEO compensation of CA$1.0m. From this we gather that Darin Rayburn is paid around the median for CEOs in the industry. What's more, Darin Rayburn holds CA$678k worth of shares in the company in their own name.

Component	2020	2019	Proportion (2020)
Salary	CA$426k	CA$400k	39%
Other	CA$663k	CA$522k	61%
Total Compensation	CA$1.1m	CA$922k	100%

On an industry level, around 54% of total compensation represents salary and 46% is other remuneration. Melcor Developments 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.

Melcor Developments Ltd.'s Growth

Melcor Developments Ltd. has reduced its earnings per share by 43% a year over the last three years. It achieved revenue growth of 14% over the last year.

The decline in EPS is a bit concerning. There's no doubt that the silver lining is that revenue is up. But it isn't sufficiently fast growth to overlook the fact that EPS has gone backwards over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Melcor Developments Ltd. Been A Good Investment?

With a three year total loss of 5.4% for the shareholders, Melcor Developments Ltd. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

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.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 4 warning signs (and 2 which can't be ignored) in Melcor Developments we think you should know about.

Important note: Melcor Developments 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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