Mostafa Kamal became the CEO of Magellan Health, Inc. (NASDAQ:MGLN) in 2015. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Mostafa Kamal's Compensation Compare With Similar Sized Companies?
According to our data, Magellan Health, Inc. has a market capitalization of US$1.9b, and paid its CEO total annual compensation worth US$2.1m over the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$532k. 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$1.0b to US$3.2b. The median total CEO compensation was US$3.9m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. Though positive, it's important we delve into the performance of the actual business.
You can see a visual representation of the CEO compensation at Magellan Health, below.
Is Magellan Health, Inc. Growing?
On average over the last three years, Magellan Health, Inc. has shrunk earnings per share by 37% each year (measured with a line of best fit). The trailing twelve months of revenue was pretty much the same as the prior period.
Sadly for shareholders, earnings per share are actually down, over three years. And the flat revenue hardly impresses. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. 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 generated a total shareholder return of 3.9% over three years, so most shareholders wouldn't be too disappointed. But they would probably prefer not to see CEO compensation far in excess of the median.
It appears that Magellan Health, Inc. remunerates its CEO below most similar sized companies.
Mostafa Kamal is remunerated more modestly than is a normal at similar sized companies. But the company lacks earnings per share growth, and returns to shareholders are less than stellar. There is room for improved company performance, but we don't see the CEO pay as a big issue here. 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).
If you want to buy a stock that is better than Magellan Health, this free list of high return, low debt companies is a great place to look.
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