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Is NRG Energy Inc (NYSE:NRG) Excessively Paying Its CEO?

In 2015 Mauricio Gutierrez was appointed CEO of NRG Energy Inc (NYSE:NRG). This analysis aims first to contrast CEO compensation with other large companies. Next, we’ll consider growth that the business demonstrates. 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.

View our latest analysis for NRG Energy

How Does Mauricio Gutierrez’s Compensation Compare With Similar Sized Companies?

Our data indicates that NRG Energy Inc is worth US$12b, and total annual CEO compensation is US$9.0m. (This figure is for the year to 2017). While we always look at total compensation first, we note that the salary component is less, at US$1.2m. We took a group of companies with market capitalizations over US$8.0b, and calculated the median CEO compensation to be US$11m. Once you start looking at very large companies, you need to take a broader range, because there simply aren’t that many of them.

So Mauricio Gutierrez receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance.

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

NYSE:NRG CEO Compensation December 5th 18

Is NRG Energy Inc Growing?

On average over the last three years, NRG Energy Inc has grown earnings per share (EPS) by 59% each year. It achieved revenue growth of 19% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. IThis sort of respectable year-on-year revenue growth is often seen at a healthy, growing business.

You might want to check this free visual report on analyst forecasts for future earnings.

Has NRG Energy Inc Been A Good Investment?

Most shareholders would probably be pleased with NRG Energy Inc for providing a total return of 290% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary…

Mauricio Gutierrez is paid around what is normal the leaders of larger companies.

Few would be critical of the leadership, since returns have been juicy and earnings per share are moving in the right direction. So one could argue the CEO compensation is quite modest, if you consider company performance! So you may want to check if insiders are buying NRG Energy shares with their own money (free access).

Of course, the past can be informative so you might be interested in considering this analytical visualization showing the company history of earnings and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.