James Stewart has been the CEO of MGM Growth Properties LLC (NYSE:MGP) since 2016. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. 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?
At the time of writing our data says that MGM Growth Properties LLC has a market cap of US$9.0b, and is paying total annual CEO compensation of US$3.5m. (This figure is for the year to December 2018). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$800k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$4.0b to US$12b. The median total CEO compensation was US$6.8m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you’ll need to understand the business better before you can form an opinion.
You can see a visual representation of the CEO compensation at MGM Growth Properties, below.
Is MGM Growth Properties LLC Growing?
MGM Growth Properties LLC has increased its earnings per share (EPS) by an average of 27% a year, over the last three years (using a line of best fit). Its revenue is up 19% over last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. This sort of respectable year-on-year revenue growth is often seen at a healthy, growing business.
Has MGM Growth Properties LLC Been A Good Investment?
I think that the total shareholder return of 40%, over three years, would leave most MGM Growth Properties LLC shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
It appears that MGM Growth Properties LLC remunerates its CEO below most similar sized companies.
Many would consider this to indicate that the pay is modest since the business is growing. And given most shareholders are probably very happy with recent returns, you might even think that James Stewart deserves a raise! Most shareholders like to see a modestly paid CEO combined with strong performance by the company. It would be even more positive if company insiders are buying shares. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at MGM Growth Properties.
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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