Yahoo Finance What Can We Conclude About Stantec's (TSE:STN) CEO Pay?
Gord Johnston became the CEO of Stantec Inc. (TSE:STN) in 2018, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also assess whether Stantec pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
View our latest analysis for Stantec
How Does Total Compensation For Gord Johnston Compare With Other Companies In The Industry?
At the time of writing, our data shows that Stantec Inc. has a market capitalization of CA$4.5b, and reported total annual CEO compensation of CA$3.5m for the year to December 2019. We note that's an increase of 14% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CA$847k.
On comparing similar companies from the same industry with market caps ranging from CA$2.6b to CA$8.4b, we found that the median CEO total compensation was CA$9.5m. Accordingly, Stantec pays its CEO under the industry median. Furthermore, Gord Johnston directly owns CA$2.5m worth of shares in the company, implying that they are deeply invested in the company's success.
Component | 2019 | 2018 | Proportion (2019) |
Salary | CA$847k | CA$763k | 24% |
Other | CA$2.7m | CA$2.3m | 76% |
Total Compensation | CA$3.5m | CA$3.1m | 100% |
On an industry level, roughly 46% of total compensation represents salary and 54% is other remuneration. Stantec sets aside a smaller share of compensation for salary, in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Stantec Inc.'s Growth Numbers
Stantec Inc. has seen its earnings per share (EPS) increase by 16% a year over the past three years. In the last year, its revenue is up 6.2%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. 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 Stantec Inc. Been A Good Investment?
Stantec Inc. has served shareholders reasonably well, with a total return of 13% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
To Conclude...
As we noted earlier, Stantec pays its CEO lower than the norm for similar-sized companies belonging to the same industry. But over the last three years, EPS growth has been growing rapidly, which is a great sign for the company. Shareholder returns, in comparison, have not been as impressive. We would wish for better returns (whether dividends or capital gains) but we do admire the solidEPS growth on show here. As a result of these considerations, CEO compensation seems quite appropriate.
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 Stantec that investors should think about before committing capital to this stock.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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