Barry Smith became the CEO of Magellan Health, Inc. (NASDAQ:MGLN) in 2013. This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. After that, we will consider the growth in the business. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. This method should give us information to assess how appropriately the company pays the CEO.
Want to participate in a short research study? Help shape the future of investing tools and you could win a $250 gift card!
How Does Barry Smith's Compensation Compare With Similar Sized Companies?
Our data indicates that Magellan Health, Inc. is worth US$1.7b, and total annual CEO compensation is US$10m. (This number is for the twelve months until December 2018). Notably, that's an increase of 37% over the year before. While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.2m. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$4.0m.
It would therefore appear that Magellan Health, Inc. pays Barry Smith more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Magellan Health has changed from year to year.
Is Magellan Health, Inc. Growing?
Over the last three years Magellan Health, Inc. has grown its earnings per share (EPS) by an average of 2.5% per year (using a line of best fit). In the last year, its revenue is up 14%.
This revenue growth could really point to a brighter future. And, while modest, the earnings per share growth is noticeable. Although we'll stop short of calling the stock a top performer, we think the company has potential. It could be important to check this free visual depiction of what analysts expect for the future.
Has Magellan Health, Inc. Been A Good Investment?
Magellan Health, Inc. has not done too badly by shareholders, with a total return of 4.5%, over three years. But they would probably prefer not to see CEO compensation far in excess of the median.
We compared total CEO remuneration at Magellan Health, Inc. with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
Over the last three years returns to investors have been uninspiring, and we would have liked to see stronger business growth. So it's certainly hard to argue that the CEO is modestly paid, although we don't see the remuneration as an issue. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Magellan Health (free visualization of insider trades).
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 email@example.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.