What Does MercadoLibre's (NASDAQ:MELI) CEO Pay Reveal?

This article will reflect on the compensation paid to Marcos Eduardo Galperín who has served as CEO of MercadoLibre, Inc. (NASDAQ:MELI) since 1999. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for MercadoLibre.

Check out our latest analysis for MercadoLibre

How Does Total Compensation For Marcos Eduardo Galperín Compare With Other Companies In The Industry?

At the time of writing, our data shows that MercadoLibre, Inc. has a market capitalization of US$56b, and reported total annual CEO compensation of US$11m for the year to December 2019. We note that's an increase of 32% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$507k.

On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$6.7m. Accordingly, our analysis reveals that MercadoLibre, Inc. pays Marcos Eduardo Galperín north of the industry median.

On an industry level, roughly 19% of total compensation represents salary and 81% is other remuneration. Investors may find it interesting that MercadoLibre paid a marginal salary to Marcos Eduardo Galperín, over the past year, focusing on non-salary compensation instead. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

MercadoLibre, Inc.'s Growth

Over the last three years, MercadoLibre, Inc. has shrunk its earnings per share by 109% per year. It achieved revenue growth of 55% over the last year.

The decrease in earnings could be a concern for some investors. On the other hand, the strong revenue growth suggests the business is growing. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has MercadoLibre, Inc. Been A Good Investment?

We think that the total shareholder return of 332%, over three years, would leave most MercadoLibre, Inc. shareholders smiling. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

MercadoLibre prefers rewarding its CEO through non-salary benefits. As previously discussed, Marcos is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. But shareholder returns and revenue growth have been very healthy as we saw before. Importantly though, EPS has not been growing over the same stretch. Although we would have liked to see earnings growth, positive shareholder returns, and growing revenues make us believe CEO compensation is reasonable.

While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. We did our research and spotted 2 warning signs for MercadoLibre that investors should look into moving forward.

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.

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 editorial-team@simplywallst.com.