We Discuss Why Canadian Tire Corporation, Limited's (TSE:CTC.A) CEO Compensation May Be Closely Reviewed

Key Insights

• Canadian Tire Corporation's Annual General Meeting to take place on 8th of May
• Salary of CA$1.30m is part of CEO Greg Hicks's total remuneration
• The overall pay is 57% above the industry average
• Canadian Tire Corporation's EPS declined by 4.9% over the past three years while total shareholder loss over the past three years was 0.9%

Our free stock report includes 3 warning signs investors should be aware of before investing in Canadian Tire Corporation. Read for free now.

Shareholders will probably not be too impressed with the underwhelming results at Canadian Tire Corporation, Limited (TSE:CTC.A) recently. At the upcoming AGM on 8th of May, shareholders can hear from the board including their plans for turning around performance. 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. We present the case why we think CEO compensation is out of sync with company performance.

Check out our latest analysis for Canadian Tire Corporation

How Does Total Compensation For Greg Hicks Compare With Other Companies In The Industry?

Our data indicates that Canadian Tire Corporation, Limited has a market capitalization of CA$8.7b, and total annual CEO compensation was reported as CA$8.8m for the year to December 2024. Notably, that's an increase of 46% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at CA$1.3m.

For comparison, other companies in the Canada Multiline Retail industry with market capitalizations ranging between CA$5.5b and CA$17b had a median total CEO compensation of CA$5.6m. This suggests that Greg Hicks is paid more than the median for the industry. Moreover, Greg Hicks also holds CA$2.5m worth of Canadian Tire Corporation stock directly under their own name.

Component	2024	2023	Proportion (2024)
Salary	CA$1.3m	CA$1.3m	15%
Other	CA$7.5m	CA$4.7m	85%
Total Compensation	CA$8.8m	CA$6.0m	100%

On an industry level, around 19% of total compensation represents salary and 81% is other remuneration. It's interesting to note that Canadian Tire Corporation 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.

Canadian Tire Corporation, Limited's Growth

Over the last three years, Canadian Tire Corporation, Limited has shrunk its earnings per share by 4.9% per year. Its revenue is down 1.9% over the previous year.

Overall this is not a very positive result for shareholders. 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. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Canadian Tire Corporation, Limited Been A Good Investment?

Since shareholders would have lost about 0.9% over three years, some Canadian Tire Corporation, Limited investors would surely be feeling negative emotions. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

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, they can question the management's plans and strategies to turn performance around and reassess their investment thesis in regards to the company.

CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 3 warning signs for Canadian Tire Corporation you should be aware of, and 1 of them makes us a bit uncomfortable.

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. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.