Mauricio Gutierrez became the CEO of NRG Energy, Inc. (NYSE:NRG) in 2015. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we’ll consider growth that the business demonstrates. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Mauricio Gutierrez’s Compensation Compare With Similar Sized Companies?
According to our data, NRG Energy, Inc. has a market capitalization of US$8.2b, and paid its CEO total annual compensation worth US$8.9m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.2m. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We examined companies with market caps from US$4.0b to US$12b, and discovered that the median CEO total compensation of that group was US$6.8m.
Thus we can conclude that Mauricio Gutierrez receives more in total compensation than the median of a group of companies in the same market, and of similar size to NRG Energy, Inc.. However, this doesn’t necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at NRG Energy has changed from year to year.
Is NRG Energy, Inc. Growing?
NRG Energy, Inc. has increased its earnings per share (EPS) by an average of 113% a year, over the last three years (using a line of best fit). Its revenue is up 3.6% over last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. It’s good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Shareholders might be interested in this free visualization of analyst forecasts.
Has NRG Energy, Inc. Been A Good Investment?
Most shareholders would probably be pleased with NRG Energy, Inc. for providing a total return of 95% over three years. 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.
We compared the total CEO remuneration paid by NRG Energy, Inc., and compared it to remuneration at a group of similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
However we must not forget that the EPS growth has been very strong over three years. On top of that, in the same period, returns to shareholders have been great. So, considering this good performance, the CEO compensation may be quite appropriate. Whatever your view on compensation, you might want to check if insiders are buying or selling NRG Energy shares (free trial).
Important note: NRG Energy may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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