In 2015 Mostafa Kamal was appointed CEO of Magellan Health, Inc. (NASDAQ:MGLN). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Mostafa Kamal’s Compensation Compare With Similar Sized Companies?
Our data indicates that Magellan Health, Inc. is worth US$1.7b, and total annual CEO compensation was reported as US$2.1m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$532k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO total compensation of that group was US$3.9m.
Most shareholders would consider it a positive that Mostafa Kamal takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
You can see a visual representation of the CEO compensation at Magellan Health, below.
Is Magellan Health, Inc. Growing?
On average over the last three years, Magellan Health, Inc. has shrunk earnings per share by 37% each year (measured with a line of best fit). The trailing twelve months of revenue was pretty much the same as the prior period.
Unfortunately, earnings per share have trended lower over the last three years. And the flat revenue hardly impresses. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Magellan Health, Inc. Been A Good Investment?
Magellan Health, Inc. has generated a total shareholder return of 1.8% over three years, so most shareholders wouldn’t be too disappointed. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.
Magellan Health, Inc. is currently paying its CEO below what is normal for companies of its size.
Mostafa Kamal is remunerated more modestly than is a normal at similar sized companies. However, the earnings per share are not moving in the right direction, and the returns to shareholders could have been better. So while shareholders shouldn’t be overly concerned about CEO compensation, we suspect most would prefer see improved performance, before increasing pay. Whatever your view on compensation, you might want to check if insiders are buying or selling Magellan Health shares (free trial).
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.
If you spot an error that warrants correction, please contact the editor at email@example.com. 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. Simply Wall St has no position in the stocks mentioned.
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