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A Quick Analysis On Saputo's (TSE:SAP) CEO Compensation

Lino Saputo has been the CEO of Saputo Inc. (TSE:SAP) since 2004, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also assess whether Saputo pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for Saputo

Comparing Saputo Inc.'s CEO Compensation With the industry

According to our data, Saputo Inc. has a market capitalization of CA$15b, and paid its CEO total annual compensation worth CA$4.0m over the year to March 2020. We note that's an increase of 9.7% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at CA$1.3m.

On comparing similar companies in the industry with market capitalizations above CA$11b, we found that the median total CEO compensation was CA$14m. Accordingly, Saputo pays its CEO under the industry median. Furthermore, Lino Saputo directly owns CA$3.5m worth of shares in the company, implying that they are deeply invested in the company's success.

Component

2020

2019

Proportion (2020)

Salary

CA$1.3m

CA$1.3m

32%

Other

CA$2.7m

CA$2.3m

68%

Total Compensation

CA$4.0m

CA$3.6m

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. It's interesting to note that Saputo allocates a smaller portion of compensation to salary in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ceo-compensation

A Look at Saputo Inc.'s Growth Numbers

Over the last three years, Saputo Inc. has shrunk its earnings per share by 8.3% per year. Its revenue is up 5.5% over the last year.

Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced earnings per share. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Saputo Inc. Been A Good Investment?

Since shareholders would have lost about 13% over three years, some Saputo Inc. investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

To Conclude...

As previously discussed, Lino is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. While we are quite underwhelmed with earnings growth, the shareholder returns over the past three years have also failed to impress us. It's tough to say that Lino is earning a very high compensation, but shareholders will likely want to see healthier investor returns before agreeing that a raise is in order.

CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. We've identified 2 warning signs for Saputo that investors should be aware of in a dynamic business environment.

Important note: Saputo 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.

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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