Yahoo Finance Does Atlantic Power Corporation's (TSE:ATP) CEO Pay Reflect Performance?
In 2015, Jim Moore was appointed CEO of Atlantic Power Corporation (TSE:ATP). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. 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.
See our latest analysis for Atlantic Power
How Does Jim Moore's Compensation Compare With Similar Sized Companies?
Our data indicates that Atlantic Power Corporation is worth CA$266m, and total annual CEO compensation was reported as US$1.7m for the year to December 2019. That's less than last year. We think total compensation is more important but we note that the CEO salary is lower, at US$575k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. When we examined a selection of companies with market caps ranging from US$100m to US$400m, we found the median CEO total compensation was US$729k.
Pay mix tells us a lot about how a company functions versus the wider industry, and it's no different in the case of Atlantic Power. On a sector level, around 35% of total compensation represents salary and 65% is other remuneration. Atlantic Power is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation
Thus we can conclude that Jim Moore receives more in total compensation than the median of a group of companies in the same market, and of similar size to Atlantic Power Corporation. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business. The graphic below shows how CEO compensation at Atlantic Power has changed from year to year.
Is Atlantic Power Corporation Growing?
On average over the last three years, Atlantic Power Corporation has seen earnings per share (EPS) move in a favourable direction by 75% each year (using a line of best fit). In the last year, its revenue is up 2.2%.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. It could be important to check this free visual depiction of what analysts expect for the future.
Has Atlantic Power Corporation Been A Good Investment?
Since shareholders would have lost about 6.8% over three years, some Atlantic Power Corporation shareholders would surely be feeling negative emotions. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
In Summary...
We examined the amount Atlantic Power Corporation pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
However we must not forget that the EPS growth has been very strong over three years. On the other hand returns to investors over the same period have probably disappointed many. One might thus conclude that it would be better if the company waited until growth is reflected in the share price, before increasing CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling Atlantic Power shares (free trial).
If you want to buy a stock that is better than Atlantic Power, 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. Thank you for reading.
