Is MPower Group Limited's (ASX:MPR) CEO Overpaid Relative To Its Peers?
In 2012 Nathan Wise was appointed CEO of MPower Group Limited (ASX:MPR). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. After that, we will consider the growth in the business. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
See our latest analysis for MPower Group
How Does Nathan Wise's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that MPower Group Limited has a market cap of AU$3.8m, and reported total annual CEO compensation of AU$341k for the year to June 2019. Notably, the salary of AU$335k is the vast majority of the CEO compensation. We examined a group of similar sized companies, with market capitalizations of below AU$297m. The median CEO total compensation in that group is AU$380k.
So Nathan Wise receives a similar amount to the median CEO pay, amongst the companies we looked at. This doesn't tell us a whole lot on its own, but looking at the performance of the actual business will give us useful context.
You can see a visual representation of the CEO compensation at MPower Group, below.
Is MPower Group Limited Growing?
On average over the last three years, MPower Group Limited has shrunk earnings per share by 42% each year (measured with a line of best fit). It achieved revenue growth of 18% over the last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. While the revenue growth is good to see, it is outweighed by the fact that earnings per share are down, over three years. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts you could get a better understanding of its growth by checking out this more detailed historical graph of earnings, revenue and cash flow.
Has MPower Group Limited Been A Good Investment?
Since shareholders would have lost about 59% over three years, some MPower Group Limited shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
In Summary...
Nathan Wise is paid around what is normal the leaders of comparable size companies.
The company isn't growing EPS, and shareholder returns have been disappointing. Most would consider it prudent for the company to hold off any CEO pay rise until performance improves. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at MPower Group.
Important note: MPower Group 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.
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.
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. Thank you for reading.
