Yahoo Finance How Should Investors React To Linamar Corporation’s (TSE:LNR) CEO Pay?
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Linda Hasenfratz has been the CEO of Linamar Corporation (TSE:LNR) since 2002. 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. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for Linamar
How Does Linda Hasenfratz’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Linamar Corporation has a market cap of CA$3.1b, and is paying total annual CEO compensation of CA$16m. (This figure is for the year to December 2017). While we always look at total compensation first, we note that the salary component is less, at CA$630k. We looked at a group of companies with market capitalizations from CA$1.3b to CA$4.3b, and the median CEO total compensation was CA$2.9m.
It would therefore appear that Linamar Corporation pays Linda Hasenfratz 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 a visual representation of the CEO compensation at Linamar, below.
Is Linamar Corporation Growing?
Linamar Corporation has increased its earnings per share (EPS) by an average of 9.6% a year, over the last three years (using a line of best fit). It achieved revenue growth of 16% over the last year.
This revenue growth could really point to a brighter future. And the modest growth in earnings per share isn’t bad, either. Although we’ll stop short of calling the stock a top performer, we think the company has potential. You might want to check this free visual report on analyst forecasts for future earnings.
Has Linamar Corporation Been A Good Investment?
With a three year total loss of 22%, Linamar Corporation would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary…
We examined the amount Linamar 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.
While we have not been overly impressed by the business performance, the shareholder returns, over three years, have been disappointing. Although we’d stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Linamar (free visualization of insider trades).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
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.
