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How Should Investors React To MGM Growth Properties LLC's (NYSE:MGP) CEO Pay?

Simply Wall St

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In 2016 James Stewart was appointed CEO of MGM Growth Properties LLC (NYSE:MGP). First, this article will compare CEO compensation with compensation at similar sized companies. Next, we'll consider growth that the business demonstrates. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

See our latest analysis for MGM Growth Properties

How Does James Stewart's Compensation Compare With Similar Sized Companies?

According to our data, MGM Growth Properties LLC has a market capitalization of US$9.2b, and pays its CEO total annual compensation worth US$3.5m. (This figure is for the year to December 2018). That's just a smallish increase of 0.5% on last year. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$800k. We examined companies with market caps from US$4.0b to US$12b, and discovered that the median CEO total compensation of that group was US$6.8m.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion.

You can see a visual representation of the CEO compensation at MGM Growth Properties, below.

NYSE:MGP CEO Compensation, May 8th 2019

Is MGM Growth Properties LLC Growing?

Over the last three years MGM Growth Properties LLC has grown its earnings per share (EPS) by an average of 35% per year (using a line of best fit). It achieved revenue growth of 33% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth I like to see. It could be important to check this free visual depiction of what analysts expect for the future.

Has MGM Growth Properties LLC Been A Good Investment?

I think that the total shareholder return of 64%, over three years, would leave most MGM Growth Properties LLC shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

MGM Growth Properties LLC is currently paying its CEO below what is normal for companies of its size. Many would consider this to indicate that the pay is modest since the business is growing. The pleasing shareholder returns are the cherry on top; you might even consider that James Stewart deserves a raise!

It is relatively rare to see a modestly paid CEO when performance is so impressive. The cherry on top would be if company insiders are buying shares with their own money. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at MGM Growth Properties.

Important note: MGM Growth Properties may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE 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.