Yahoo Finance Should You Worry About Magna International Inc’s (TSE:MG) CEO Pay?
Don Walker has been the CEO of Magna International Inc (TSE:MG) since 2010. This analysis aims first to contrast CEO compensation with other large companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for Magna International
How Does Don Walker’s Compensation Compare With Similar Sized Companies?
According to our data, Magna International Inc has a market capitalization of CA$20b, and pays its CEO total annual compensation worth US$20m. (This figure is for the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$325k. When we examined a group of companies with market caps over US$8.0b, we found that their median CEO compensation was US$6.9m. (We took a wide range because the CEOs of massive companies tend to be paid similar amounts – even though some are quite a bit bigger than others).
Thus we can conclude that Don Walker receives more in total compensation than the median of a group of large companies in the same market as Magna International Inc. However, this doesn’t necessarily mean the pay 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, below, how CEO compensation at Magna International has changed over time.
Is Magna International Inc Growing?
Over the last three years Magna International Inc has grown its earnings per share (EPS) by an average of 12% per year. Its revenue is up 18% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It’s also good to see decent revenue growth in the last year, suggesting the business is healthy and growing.
You might want to check this free visual report on analyst forecasts for future earnings.
Has Magna International Inc Been A Good Investment?
Magna International Inc has served shareholders reasonably well, with a total return of 15% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
In Summary…
We examined the amount Magna International Inc pays its CEO, and compared it to the amount paid by other large companies. As discussed above, we discovered that the company pays more than the median of that group.
However, the earnings per share growth over three years is certainly impressive. We also note that, over the same time frame, shareholder returns haven’t been bad. So, considering the EPS growth we do not wish to criticize the level of CEO compensation, though we’d recommend further research on management. So you may want to check if insiders are buying Magna International shares with their own money (free access).
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.
