Yahoo Finance Why We Think Metro Inc.'s (TSE:MRU) CEO Compensation Is Not Excessive At All
Shareholders may be wondering what CEO Eric La Fleche plans to do to improve the less than great performance at Metro Inc. (TSE:MRU) recently. One way they can exercise their influence on management is through voting on resolutions, such as executive remuneration at the next AGM, coming up on 25 January 2022. Voting on executive pay could be a powerful way to influence management, as studies have shown that the right compensation incentives impact company performance. In our opinion, CEO compensation does not look excessive and we discuss why.
Check out our latest analysis for Metro
How Does Total Compensation For Eric La Fleche Compare With Other Companies In The Industry?
At the time of writing, our data shows that Metro Inc. has a market capitalization of CA$16b, and reported total annual CEO compensation of CA$5.0m for the year to September 2021. That is, the compensation was roughly the same as last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CA$1.0m.
In comparison with other companies in the industry with market capitalizations over CA$10b , the reported median total CEO compensation was CA$11m. This suggests that Eric La Fleche is paid below the industry median. What's more, Eric La Fleche holds CA$18m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
Component | 2021 | 2020 | Proportion (2021) |
Salary | CA$1.0m | CA$1.0m | 20% |
Other | CA$4.0m | CA$4.1m | 80% |
Total Compensation | CA$5.0m | CA$5.1m | 100% |
Talking in terms of the industry, salary represented approximately 38% of total compensation out of all the companies we analyzed, while other remuneration made up 62% of the pie. In Metro's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Metro Inc.'s Growth
Over the last three years, Metro Inc. has shrunk its earnings per share by 22% per year. Its revenue is up 1.6% over the last year.
Few shareholders would be pleased to read that EPS have declined. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in EPS. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Metro Inc. Been A Good Investment?
Most shareholders would probably be pleased with Metro Inc. for providing a total return of 41% over three years. 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.
To Conclude...
While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us wonder if these strong returns can continue. These concerns could be addressed to the board and shareholders should revisit their investment thesis to see if it still makes sense.
CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Metro (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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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.
