Is Cargojet Inc. (TSE:CJT) Excessively Paying Its CEO?

The CEO of Cargojet Inc. (TSE:CJT) is Ajay Virmani. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Cargojet

How Does Ajay Virmani's Compensation Compare With Similar Sized Companies?

Our data indicates that Cargojet Inc. is worth CA$1.5b, and total annual CEO compensation was reported as CA$9.4m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at CA$975k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from CA$523m to CA$2.1b, we found the median CEO total compensation was CA$2.2m.

As you can see, Ajay Virmani is paid more than the median CEO pay at companies of a similar size, in the same market. However, this does not necessarily mean Cargojet Inc. is paying too much. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

The graphic below shows how CEO compensation at Cargojet has changed from year to year.

Is Cargojet Inc. Growing?

Cargojet Inc. has increased its earnings per share (EPS) by an average of 46% a year, over the last three years (using a line of best fit). Its revenue is up 8.9% over last year.

This demonstrates that the company has been improving recently. A good result. It's also good to see modest revenue growth, suggesting the underlying business is healthy. It could be important to check this free visual depiction of what analysts expect for the future.

Has Cargojet Inc. Been A Good Investment?

I think that the total shareholder return of 134%, over three years, would leave most Cargojet Inc. shareholders smiling. 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.

In Summary...

We examined the amount Cargojet Inc. pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

Importantly, though, the company has impressed with its earnings per share growth, over three years. Even better, returns to shareholders have been plentiful, over the same time period. So, considering this good performance, the CEO compensation may be quite appropriate. So you may want to check if insiders are buying Cargojet shares with their own money (free access).

If you want to buy a stock that is better than Cargojet, this free list of high return, low debt companies is a great place to look.

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