Here's Why Shareholders May Consider Paying TMX Group Limited's (TSE:X) CEO A Little More

Key Insights

• TMX Group to hold its Annual General Meeting on 3rd of May

• Salary of CA$800.0k is part of CEO John McKenzie's total remuneration

• The overall pay is 63% below the industry average

• TMX Group's EPS grew by 9.0% over the past three years while total shareholder return over the past three years was 44%

Shareholders will probably not be disappointed by the robust results at TMX Group Limited (TSE:X) recently and they will be keeping this in mind as they go into the AGM on 3rd of May. The focus will probably be on the future strategic initiatives that the board and management will put in place to improve the business rather than executive remuneration when they cast their votes on company resolutions. In our analysis below, we discuss why we think the CEO compensation looks acceptable and the case for a raise.

See our latest analysis for TMX Group

Comparing TMX Group Limited's CEO Compensation With The Industry

According to our data, TMX Group Limited has a market capitalization of CA$10b, and paid its CEO total annual compensation worth CA$4.2m over the year to December 2023. We note that's an increase of 30% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CA$800k.

For comparison, other companies in the Canadian Capital Markets industry with market capitalizations ranging between CA$5.5b and CA$16b had a median total CEO compensation of CA$11m. This suggests that John McKenzie is paid below the industry median. Furthermore, John McKenzie directly owns CA$4.5m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 64% of total compensation represents salary and 36% is other remuneration. TMX Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at TMX Group Limited's Growth Numbers

Over the past three years, TMX Group Limited has seen its earnings per share (EPS) grow by 9.0% per year. It achieved revenue growth of 56% over the last year.

It's great to see that revenue growth is strong. And in that context, the modest EPS improvement certainly isn't shabby. We'd stop short of saying the business performance is amazing, but there are enough positives to justify further research, or even adding the stock to your watch-list. 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 TMX Group Limited Been A Good Investment?

We think that the total shareholder return of 44%, over three years, would leave most TMX Group Limited 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.

To Conclude...

Overall, the company hasn't done too poorly performance-wise, but we would like to see some improvement. Assuming the business continues to grow at a good clip, few shareholders would raise any objections to the CEO's remuneration. Instead, investors might be more interested in discussions that would help manage their longer-term growth expectations such as company business strategies and future growth potential.

CEO compensation can have a massive impact on performance, but it's just one element. We've identified 1 warning sign for TMX Group that investors should be aware of in a dynamic business environment.

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.