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What Can We Conclude About MGM Growth Properties' (NYSE:MGP) CEO Pay?

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·4 min read
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This article will reflect on the compensation paid to James Stewart who has served as CEO of MGM Growth Properties LLC (NYSE:MGP) since 2016. This analysis will also assess whether MGM Growth Properties pays its CEO appropriately, considering its funds from operations growth and total shareholder returns.

View our latest analysis for MGM Growth Properties

Comparing MGM Growth Properties LLC's CEO Compensation With the industry

At the time of writing, our data shows that MGM Growth Properties LLC has a market capitalization of US$8.3b, and reported total annual CEO compensation of US$4.1m for the year to December 2019. That's a notable increase of 15% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$834k.

For comparison, other companies in the same industry with market capitalizations ranging between US$4.0b and US$12b had a median total CEO compensation of US$6.3m. Accordingly, MGM Growth Properties pays its CEO under the industry median. What's more, James Stewart holds US$3.1m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component

2019

2018

Proportion (2019)

Salary

US$834k

US$800k

20%

Other

US$3.2m

US$2.7m

80%

Total Compensation

US$4.1m

US$3.5m

100%

On an industry level, around 15% of total compensation represents salary and 85% is other remuneration. MGM Growth Properties pays out 20% of remuneration in the form of a salary, significantly higher than the industry average. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ceo-compensation

MGM Growth Properties LLC's Growth

MGM Growth Properties LLC's funds from operations (FFO) grew 10% per yearover the last three years. It achieved revenue growth of 3.5% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has MGM Growth Properties LLC Been A Good Investment?

MGM Growth Properties LLC has generated a total shareholder return of 12% over three years, so most shareholders would be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

To Conclude...

As previously discussed, James is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. Meanwhile, FFO growth has been rock solid for the past three years. However, shareholder returns have failed to show the same level of growth. We would wish for better returns (whether dividends or capital gains) but we do admire the solidFFO growth on show here. So it's fair to say James has done quite well despite modest compensation and shareholders might not be averse to a raise.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 3 warning signs for MGM Growth Properties (of which 1 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.

Important note: MGM Growth Properties 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. 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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.