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Is Encore Capital Group, Inc. (NASDAQ:ECPG) Overpaying Its CEO?

Simply Wall St

Ashish Masih has been the CEO of Encore Capital Group, Inc. (NASDAQ:ECPG) since 2017. First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for Encore Capital Group

How Does Ashish Masih's Compensation Compare With Similar Sized Companies?

At the time of writing, our data says that Encore Capital Group, Inc. has a market cap of US$1.1b, and reported total annual CEO compensation of US$2.8m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$734k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$400m to US$1.6b. The median total CEO compensation was US$2.6m.

So Ashish Masih receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.

The graphic below shows how CEO compensation at Encore Capital Group has changed from year to year.

NasdaqGS:ECPG CEO Compensation, January 2nd 2020

Is Encore Capital Group, Inc. Growing?

Over the last three years Encore Capital Group, Inc. has grown its earnings per share (EPS) by an average of 21% per year (using a line of best fit). It achieved revenue growth of 6.8% over the last year.

This demonstrates that the company has been improving recently. A good result. It's also good to see modest revenue growth, suggesting the underlying business is healthy. Shareholders might be interested in this free visualization of analyst forecasts.

Has Encore Capital Group, Inc. Been A Good Investment?

Encore Capital Group, Inc. has generated a total shareholder return of 17% 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.

In Summary...

Ashish Masih is paid around what is normal the leaders of comparable size companies.

The company is growing EPS but shareholder returns have been sound but not amazing. As a result of these considerations, I would suggest the CEO pay is reasonable. Whatever your view on compensation, you might want to check if insiders are buying or selling Encore Capital Group shares (free trial).

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned.

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