Yahoo Finance Does Air Canada's (TSE:AC) CEO Pay Reflect Performance?
Calin Rovinescu became the CEO of Air Canada (TSE:AC) in 2009. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This method should give us information to assess how appropriately the company pays the CEO.
Check out our latest analysis for Air Canada
How Does Calin Rovinescu's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Air Canada has a market cap of CA$12b, and reported total annual CEO compensation of CA$12m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at CA$1.4m. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined companies with market caps from CA$5.3b to CA$16b, and discovered that the median CEO total compensation of that group was CA$5.4m.
It would therefore appear that Air Canada pays Calin Rovinescu more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
You can see, below, how CEO compensation at Air Canada has changed over time.
Is Air Canada Growing?
Air Canada saw earnings per share stay pretty flat over the last three years, albeit with a slight decrease, according to the line of best fit. It achieved revenue growth of 10% over the last year.
In the last three years the company has failed to grow earnings per share. And while it's good to see some good revenue growth recently, the growth isn't really fast enough for me to put aside my concerns around earnings. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.
Has Air Canada Been A Good Investment?
I think that the total shareholder return of 251%, over three years, would leave most Air Canada shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
We compared total CEO remuneration at Air Canada with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
We think many shareholders would be underwhelmed with the business growth over the last three years. On the other hand, returns have been good, so the company is doing something right. Given this situation we doubt shareholders are particularly concerned about the CEO compensation. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Air Canada (free visualization of insider trades).
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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If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.
