Nancy Southern has been the CEO of ATCO Ltd. (TSE:ACO.X) since 2000, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether ATCO pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
Comparing ATCO Ltd.'s CEO Compensation With the industry
According to our data, ATCO Ltd. has a market capitalization of CA$4.7b, and paid its CEO total annual compensation worth CA$2.1m over the year to December 2019. That's a notable decrease of 57% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at CA$1.0m.
On examining similar-sized companies in the industry with market capitalizations between CA$2.7b and CA$8.6b, we discovered that the median CEO total compensation of that group was CA$4.4m. In other words, ATCO pays its CEO lower than the industry median. Furthermore, Nancy Southern directly owns CA$25m worth of shares in the company, implying that they are deeply invested in the company's success.
Talking in terms of the industry, salary represented approximately 14% of total compensation out of all the companies we analyzed, while other remuneration made up 86% of the pie. ATCO is paying a higher share of its remuneration through a salary in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
ATCO Ltd.'s Growth
Over the past three years, ATCO Ltd. has seen its earnings per share (EPS) grow by 6.3% per year. Its revenue is down 9.3% over the previous year.
We would argue that the lack of revenue growth in the last year is less than ideal, but the modest improvement in EPS is good. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has ATCO Ltd. Been A Good Investment?
With a three year total loss of 1.9% for the shareholders, ATCO Ltd. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
As we noted earlier, ATCO pays its CEO lower than the norm for similar-sized companies belonging to the same industry. But the EPS growth is lacking, just like the returns (over three years). So while we would not say that Nancy is generously paid, it would be good to see an improvement in business performance before there is talk about a raise.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 2 warning signs for ATCO (1 is a bit concerning!) that you should be aware of before investing here.
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.
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. 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.
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