In 2016 James Stewart was appointed CEO of MGM Growth Properties LLC (NYSE:MGP). First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This method should give us information to assess how appropriately the company pays the CEO.
How Does James Stewart’s Compensation Compare With Similar Sized Companies?
According to our data, MGM Growth Properties LLC has a market capitalization of US$10b, and paid its CEO total annual compensation worth US$3.5m over the year to December 2018. While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$800k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO total compensation to be US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren’t that many of them.
A first glance this seems like a real positive for shareholders, since James Stewart is paid less than the average total compensation paid by other large companies. Though positive, it’s important we delve into the performance of the actual business.
You can see, below, how CEO compensation at MGM Growth Properties has changed over time.
Is MGM Growth Properties LLC Growing?
Over the last three years MGM Growth Properties LLC has grown its earnings per share (EPS) by an average of 17% per year (using a line of best fit). It achieved revenue growth of 16% over the last year.
This shows that the company has improved itself over the last few years. Good news for shareholders. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business. You might want to check this free visual report on analyst forecasts for future earnings.
Has MGM Growth Properties LLC Been A Good Investment?
Most shareholders would probably be pleased with MGM Growth Properties LLC for providing a total return of 46% 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.
MGM Growth Properties LLC is currently paying its CEO below what is normal for large companies.
Many would consider this to indicate that the pay is modest since the business is growing. The strong history of shareholder returns might even have some thinking that James Stewart deserves a raise! Most shareholders like to see a modestly paid CEO combined with strong performance by the company. But it is even better if company insiders are also buying shares with their own money. Shareholders may want to check for free if MGM Growth Properties insiders are buying or selling shares.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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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