Neal Barclay has been the CEO of Meridian Energy Limited (NZSE:MEL) since 2018, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
How Does Total Compensation For Neal Barclay Compare With Other Companies In The Industry?
At the time of writing, our data shows that Meridian Energy Limited has a market capitalization of NZ$12b, and reported total annual CEO compensation of NZ$2.0m for the year to June 2020. We note that's an increase of 20% above last year. Notably, the salary which is NZ$1.07m, represents most of the total compensation being paid.
For comparison, other companies in the same industry with market capitalizations ranging between NZ$6.1b and NZ$18b had a median total CEO compensation of NZ$324k. This suggests that Neal Barclay is paid more than the median for the industry. What's more, Neal Barclay holds NZ$2.1m worth of shares in the company in their own name.
Talking in terms of the industry, salary represented approximately 64% of total compensation out of all the companies we analyzed, while other remuneration made up 36% of the pie. Meridian Energy sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.
A Look at Meridian Energy Limited's Growth Numbers
Over the last three years, Meridian Energy Limited has shrunk its earnings per share by 4.2% per year. In the last year, its revenue is down 2.5%.
Few shareholders would be pleased to read that EPS have declined. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Meridian Energy Limited Been A Good Investment?
We think that the total shareholder return of 88%, over three years, would leave most Meridian Energy Limited shareholders smiling. So they may not be at all concerned if the CEO were to be paid more than is normal for companies around the same size.
As previously discussed, Neal is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. We're not seeing great strides in EPS, but the company has clearly pleased some investors, given the returns over the last three years. So while we would not say that Neal is generously paid, stockholders would want to see some EPS growth before agreeing that a raise is a good idea.
CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. We did our research and identified 2 warning signs (and 1 which makes us a bit uncomfortable) in Meridian Energy we think you should know about.
Switching gears from Meridian Energy, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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. 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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