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This article will reflect on the compensation paid to Alvin Murstein who has served as CEO of Medallion Financial Corp. (NASDAQ:MFIN) since 1996. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Medallion Financial Corp.'s CEO Compensation With the industry
Our data indicates that Medallion Financial Corp. has a market capitalization of US$80m, and total annual CEO compensation was reported as US$1.5m for the year to December 2019. That's a notable increase of 13% on last year. Notably, the salary which is US$890.7k, represents most of the total compensation being paid.
In comparison with other companies in the industry with market capitalizations under US$200m, the reported median total CEO compensation was US$876k. This suggests that Alvin Murstein is paid more than the median for the industry. Moreover, Alvin Murstein also holds US$5.4m worth of Medallion Financial stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Talking in terms of the industry, salary represented approximately 17% of total compensation out of all the companies we analyzed, while other remuneration made up 83% of the pie. It's interesting to note that Medallion Financial pays out a greater portion of remuneration through salary, compared to the industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.
A Look at Medallion Financial Corp.'s Growth Numbers
Medallion Financial Corp. has reduced its earnings per share by 41% a year over the last three years. Its revenue is up 1.8% over the last year.
The decline in earnings is a bit concerning. The modest increase in revenue in the last year isn't enough to make us overlook the disappointing change in earnings per share. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 Medallion Financial Corp. Been A Good Investment?
With a total shareholder return of 31% over three years, Medallion Financial Corp. shareholders would, in general, 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.
As previously discussed, Alvin is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. This doesn't look great when you realize that the company has been suffering from negative earnings growth for the last three years. And shareholder returns are decent but not great. So you can understand why we do not think CEO compensation is particularly modest!
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 3 warning signs (and 1 which is a bit unpleasant) in Medallion Financial we think you should know about.
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.
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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