Yahoo Finance This Is Why Magellan Aerospace Corporation's (TSE:MAL) CEO Compensation Looks Appropriate
Key Insights
Magellan Aerospace to hold its Annual General Meeting on 30th of April
CEO Phil Underwood's total compensation includes salary of CA$567.8k
The total compensation is 41% less than the average for the industry
Magellan Aerospace's EPS grew by 42% over the past three years while total shareholder loss over the past three years was 20%
Performance at Magellan Aerospace Corporation (TSE:MAL) has been rather uninspiring recently and shareholders may be wondering how CEO Phil Underwood plans to fix this. At the next AGM coming up on 30th of April, they can influence managerial decision making through voting on resolutions, including executive remuneration. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We have prepared some analysis below to show that CEO compensation looks to be reasonable.
See our latest analysis for Magellan Aerospace
How Does Total Compensation For Phil Underwood Compare With Other Companies In The Industry?
At the time of writing, our data shows that Magellan Aerospace Corporation has a market capitalization of CA$457m, and reported total annual CEO compensation of CA$1.0m for the year to December 2023. That's a notable increase of 20% on last year. In particular, the salary of CA$567.8k, makes up a fairly large portion of the total compensation being paid to the CEO.
For comparison, other companies in the Canadian Aerospace & Defense industry with market capitalizations ranging between CA$273m and CA$1.1b had a median total CEO compensation of CA$1.7m. That is to say, Phil Underwood is paid under the industry median.
Component | 2023 | 2022 | Proportion (2023) |
Salary | CA$568k | CA$541k | 56% |
Other | CA$439k | CA$298k | 44% |
Total Compensation | CA$1.0m | CA$839k | 100% |
Speaking on an industry level, nearly 56% of total compensation represents salary, while the remainder of 44% is other remuneration. Magellan Aerospace is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.
A Look at Magellan Aerospace Corporation's Growth Numbers
Over the past three years, Magellan Aerospace Corporation has seen its earnings per share (EPS) grow by 42% per year. Its revenue is up 15% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Magellan Aerospace Corporation Been A Good Investment?
With a three year total loss of 20% for the shareholders, Magellan Aerospace Corporation would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
The loss to shareholders over the past three years is certainly concerning. This diverges with the robust growth in EPS, suggesting that there is a large discrepancy between share price and fundamentals. A key question may be why the fundamentals have not yet been reflected into the share price. In the upcoming AGM, shareholders should take this opportunity to raise these concerns with the board and revisit their investment thesis with regards to the company.
Whatever your view on compensation, you might want to check if insiders are buying or selling Magellan Aerospace shares (free trial).
Important note: Magellan Aerospace is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
