It's Unlikely That Magellan Financial Group Limited's (ASX:MFG) CEO Will See A Huge Pay Rise This Year

CEO Brett Cairns has done a decent job of delivering relatively good performance at Magellan Financial Group Limited (ASX:MFG) recently. As shareholders go into the upcoming AGM on 21 October 2021, CEO compensation will probably not be their focus, but rather the steps management will take to continue the growth momentum. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

Check out our latest analysis for Magellan Financial Group

How Does Total Compensation For Brett Cairns Compare With Other Companies In The Industry?

According to our data, Magellan Financial Group Limited has a market capitalization of AU$6.1b, and paid its CEO total annual compensation worth AU$2.5m over the year to June 2021. Notably, that's an increase of 41% over the year before. Notably, the salary which is AU$1.52m, represents most of the total compensation being paid.

In comparison with other companies in the industry with market capitalizations ranging from AU$2.7b to AU$8.7b, the reported median CEO total compensation was AU$1.3m. Hence, we can conclude that Brett Cairns is remunerated higher than the industry median. What's more, Brett Cairns holds AU$39m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component	2021	2020	Proportion (2021)
Salary	AU$1.5m	AU$1.5m	60%
Other	AU$1m	AU$271k	40%
Total Compensation	AU$2.5m	AU$1.8m	100%

Talking in terms of the industry, salary represented approximately 61% of total compensation out of all the companies we analyzed, while other remuneration made up 39% of the pie. Magellan Financial Group is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

Magellan Financial Group Limited's Growth

Magellan Financial Group Limited has seen its earnings per share (EPS) increase by 5.5% a year over the past three years. In the last year, its revenue is up 3.6%.

We would argue that the improvement in revenue is good, but isn't particularly impressive, but it is good to see modest EPS growth. So there are some positives here, but not enough to earn high praise. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Magellan Financial Group Limited Been A Good Investment?

Boasting a total shareholder return of 37% over three years, Magellan Financial Group Limited has done well by shareholders. 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.

In Summary...

Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. That's why we did some digging and identified 3 warning signs for Magellan Financial Group that investors should think about before committing capital to this stock.

Important note: Magellan Financial Group is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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.

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