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This article will reflect on the compensation paid to Gabe Tirador who has served as CEO of Mercury General Corporation (NYSE:MCY) since 2007. This analysis will also assess whether Mercury General pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
How Does Total Compensation For Gabe Tirador Compare With Other Companies In The Industry?
Our data indicates that Mercury General Corporation has a market capitalization of US$2.3b, and total annual CEO compensation was reported as US$1.7m for the year to December 2019. Notably, that's an increase of 12% over the year before. Notably, the salary which is US$1.05m, represents most of the total compensation being paid.
On examining similar-sized companies in the industry with market capitalizations between US$1.0b and US$3.2b, we discovered that the median CEO total compensation of that group was US$4.3m. This suggests that Gabe Tirador is paid below the industry median. Moreover, Gabe Tirador also holds US$1.8m worth of Mercury General stock directly under their own name.
Talking in terms of the industry, salary represented approximately 16% of total compensation out of all the companies we analyzed, while other remuneration made up 84% of the pie. Mercury General is paying a higher share of its remuneration through a salary in comparison to the overall 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.
Mercury General Corporation's Growth
Mercury General Corporation has seen its earnings per share (EPS) increase by 34% a year over the past three years. The trailing twelve months of revenue was pretty much the same as the prior period.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Mercury General Corporation Been A Good Investment?
Given the total shareholder loss of 16% over three years, many shareholders in Mercury General Corporation are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we noted earlier, Mercury General pays its CEO lower than the norm for similar-sized companies belonging to the same industry. However, the EPS growth over three years is certainly impressive. Although we would've liked to see positive investor returns, it would be bold of us to criticize CEO compensation when EPS are up. Shareholders, though, would ideally like to see shareholder returns head north before they agree to any raise.
Important note: Mercury General 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.
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