We Think Marcus & Millichap, Inc.'s (NYSE:MMI) CEO Compensation Package Needs To Be Put Under A Microscope

Key Insights

• Marcus & Millichap to hold its Annual General Meeting on 2nd of May
• Salary of US$700.0k is part of CEO Hessam Nadji's total remuneration
• Total compensation is 35% above industry average
• Over the past three years, Marcus & Millichap's EPS fell by 31% and over the past three years, the total loss to shareholders 5.1%

Shareholders will probably not be too impressed with the underwhelming results at Marcus & Millichap, Inc. (NYSE:MMI) recently. Shareholders can take the chance to hold the board and management accountable for the unsatisfactory performance at the next AGM on 2nd of May. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.

See our latest analysis for Marcus & Millichap

Comparing Marcus & Millichap, Inc.'s CEO Compensation With The Industry

At the time of writing, our data shows that Marcus & Millichap, Inc. has a market capitalization of US$1.2b, and reported total annual CEO compensation of US$10m for the year to December 2023. That's a notable increase of 38% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$700k.

In comparison with other companies in the American Real Estate industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$7.7m. This suggests that Hessam Nadji is paid more than the median for the industry. Furthermore, Hessam Nadji directly owns US$7.8m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2023	2022	Proportion (2023)
Salary	US$700k	US$675k	7%
Other	US$9.7m	US$6.9m	93%
Total Compensation	US$10m	US$7.5m	100%

Speaking on an industry level, nearly 28% of total compensation represents salary, while the remainder of 72% is other remuneration. It's interesting to note that Marcus & Millichap allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

Marcus & Millichap, Inc.'s Growth

Marcus & Millichap, Inc. has reduced its earnings per share by 31% a year over the last three years. Its revenue is down 50% over the previous year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Marcus & Millichap, Inc. Been A Good Investment?

With a three year total loss of 5.1% for the shareholders, Marcus & Millichap, Inc. would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

Along with the business performing poorly, shareholders have suffered with poor share price returns on their investments, suggesting that there's little to no chance of them being in favor of a CEO pay raise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 2 warning signs for Marcus & Millichap you should be aware of, and 1 of them shouldn't be ignored.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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.