Yahoo Finance Is Lithium Americas Corp. (TSE:LAC) Excessively Paying Its CEO?
Tom Hodgson has been the CEO of Lithium Americas Corp. (TSE:LAC) since 2015. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
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How Does Tom Hodgson’s Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Lithium Americas Corp. has a market cap of CA$401m, and is paying total annual CEO compensation of US$4.3m. (This is based on the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$313k. We examined companies with market caps from US$100m to US$400m, and discovered that the median CEO compensation of that group was US$689k.
As you can see, Tom Hodgson is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Lithium Americas Corp. is paying too much. 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 Lithium Americas, below.
Is Lithium Americas Corp. Growing?
Lithium Americas Corp. has reduced its earnings per share by an average of 3.3% a year, over the last three years. In the last year, its revenue is down -7.7%.
Unfortunately, earnings per share have trended lower over the last three years. 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.
Shareholders might be interested in this free visualization of analyst forecasts. .
Has Lithium Americas Corp. Been A Good Investment?
Most shareholders would probably be pleased with Lithium Americas Corp. for providing a total return of 161% over three years. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
In Summary…
We compared total CEO remuneration at Lithium Americas Corp. 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.
Neither earnings per share nor revenue have been growing sufficiently fast to impress us, over the last three years.
But clearly there are some positives, because investors have done well over the same time frame. Considering this, shareholders are probably not too worried about the CEO compensation. Whatever your view on compensation, you might want to check if insiders are buying or selling Lithium Americas shares (free trial).
Or you might prefer examine intently this intuitive graph showing past earnings and revenue.
To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.
