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Is Mallinckrodt plc's (NYSE:MNK) CEO Paid At A Competitive Rate?

Simply Wall St

In 2013 Mark Trudeau was appointed CEO of Mallinckrodt plc (NYSE:MNK). 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 process should give us an idea about how appropriately the CEO is paid.

View our latest analysis for Mallinckrodt

How Does Mark Trudeau's Compensation Compare With Similar Sized Companies?

According to our data, Mallinckrodt plc has a market capitalization of US$580m, and pays its CEO total annual compensation worth US$14m. (This figure is for the year to December 2018). While this analysis focuses on total compensation, it's worth noting the salary is lower, valued at US$1.1m. We looked at a group of companies with market capitalizations from US$200m to US$800m, and the median CEO total compensation was US$1.8m.

Thus we can conclude that Mark Trudeau receives more in total compensation than the median of a group of companies in the same market, and of similar size to Mallinckrodt plc. However, this doesn't necessarily mean the pay is too high. We can get a better idea of how generous the pay is by looking at the performance of the underlying business.

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

NYSE:MNK CEO Compensation, July 22nd 2019

Is Mallinckrodt plc Growing?

Mallinckrodt plc has reduced its earnings per share by an average of 53% a year, over the last three years (measured with a line of best fit). Its revenue is down -4.8% over last year.

Few shareholders would be pleased to read that earnings per share are lower over three years. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. You might want to check this free visual report on analyst forecasts for future earnings.

Has Mallinckrodt plc Been A Good Investment?

With a three year total loss of 90%, Mallinckrodt plc would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary...

We examined the amount Mallinckrodt plc pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.

We think many shareholders would be underwhelmed with the business growth over the last three years.

Arguably worse, investors are without a positive return for the last three years. Some might well form the view that the CEO is paid too generously! Shareholders may want to check for free if Mallinckrodt insiders are buying or selling shares.

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.