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How Should Investors React To Mercury General Corporation's (NYSE:MCY) CEO Pay?

Simply Wall St

Gabe Tirador became the CEO of Mercury General Corporation (NYSE:MCY) in 2007. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.

Check out our latest analysis for Mercury General

How Does Gabe Tirador's Compensation Compare With Similar Sized Companies?

According to our data, Mercury General Corporation has a market capitalization of US$2.6b, and paid its CEO total annual compensation worth US$1.5m over the year to December 2018. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.0m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$2.0b to US$6.4b. The median total CEO compensation was US$5.1m.

A first glance this seems like a real positive for shareholders, since Gabe Tirador is paid less than the average total compensation paid by similar sized companies. However, before we heap on the praise, we should delve deeper to understand business performance.

The graphic below shows how CEO compensation at Mercury General has changed from year to year.

NYSE:MCY CEO Compensation, November 5th 2019

Is Mercury General Corporation Growing?

Mercury General Corporation has increased its earnings per share (EPS) by an average of 23% a year, over the last three years (using a line of best fit). Its revenue is up 11% over last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's a real positive to see this sort of growth in a single year. That suggests a healthy and growing business. It could be important to check this free visual depiction of what analysts expect for the future.

Has Mercury General Corporation Been A Good Investment?

With a three year total loss of 0.6%, Mercury General Corporation would certainly have some dissatisfied shareholders. It therefore might be upsetting for shareholders if the CEO were paid generously.

In Summary...

It looks like Mercury General Corporation pays its CEO less than similar sized companies.

Many would consider this to indicate that the pay is modest since the business is growing. Few would deny that the total shareholder return over the last three years could have been a lot better. So while we don't think, Gabe Tirador is paid too much, shareholders may hope that business performance translates to investment returns before pay rises are given out. This sort of circumstance certainly justifies further research, because the investment returns might still come in the future. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Mercury General.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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. Thank you for reading.