John Farahi became the CEO of Monarch Casino & Resort, Inc. (NASDAQ:MCRI) in 1993, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Monarch Casino & Resort.
How Does Total Compensation For John Farahi Compare With Other Companies In The Industry?
Our data indicates that Monarch Casino & Resort, Inc. has a market capitalization of US$827m, and total annual CEO compensation was reported as US$1.7m for the year to December 2019. That's mostly flat as compared to the prior year's compensation. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$750k.
On examining similar-sized companies in the industry with market capitalizations between US$400m and US$1.6b, we discovered that the median CEO total compensation of that group was US$2.5m. In other words, Monarch Casino & Resort pays its CEO lower than the industry median. Furthermore, John Farahi directly owns US$130m worth of shares in the company, implying that they are deeply invested in the company's success.
On an industry level, around 25% of total compensation represents salary and 75% is other remuneration. Monarch Casino & Resort is paying a higher share of its remuneration through a salary in comparison to the overall industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Monarch Casino & Resort, Inc.'s Growth Numbers
Over the last three years, Monarch Casino & Resort, Inc. has shrunk its earnings per share by 22% per year. Its revenue is down 21% over the previous year.
Few shareholders would be pleased to read that EPS have declined. 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. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Monarch Casino & Resort, Inc. Been A Good Investment?
Monarch Casino & Resort, Inc. has served shareholders reasonably well, with a total return of 12% over three years. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.
As we noted earlier, Monarch Casino & Resort pays its CEO lower than the norm for similar-sized companies belonging to the same industry. Shareholder returns have been uninspiring, but EPS growth has arguably been worse, over the last three years. It's tough for us to say that John is earning a high compensation, but any bump in pay is unlikely at this stage since shareholders will likely hold off support until performance improves.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We did our research and identified 3 warning signs (and 1 which makes us a bit uncomfortable) in Monarch Casino & Resort we think you should know about.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email firstname.lastname@example.org.