Is MGM China Holdings Limited's (HKG:2282) CEO Pay Justified?
The CEO of MGM China Holdings Limited (HKG:2282) is Grant Bowie. 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. Third, we'll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
See our latest analysis for MGM China Holdings
How Does Grant Bowie's Compensation Compare With Similar Sized Companies?
Our data indicates that MGM China Holdings Limited is worth HK$44b, and total annual CEO compensation was reported as HK$53m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at HK$16m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from HK$31b to HK$93b, we found the median CEO total compensation was HK$4.8m.
It would therefore appear that MGM China Holdings Limited pays Grant Bowie more than the median CEO remuneration at companies of a similar size, in the same market. However, this fact alone doesn't mean the remuneration 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 MGM China Holdings has changed from year to year.
Is MGM China Holdings Limited Growing?
On average over the last three years, MGM China Holdings Limited has shrunk earnings per share by 32% each year (measured with a line of best fit). It achieved revenue growth of 29% over the last year.
The reduction in earnings per share, over three years, is arguably concerning. But on the other hand, revenue growth is strong, suggesting a brighter future. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. You might want to check this free visual report on analyst forecasts for future earnings.
Has MGM China Holdings Limited Been A Good Investment?
Given the total loss of 18% over three years, many shareholders in MGM China Holdings Limited are probably rather dissatisfied, to say the least. So shareholders would probably think the company shouldn't be too generous with CEO compensation.
In Summary...
We compared total CEO remuneration at MGM China Holdings Limited with the amount paid at companies with a similar market capitalization. As discussed above, we discovered that the company pays more than the median of that group.
While we have not been overly impressed by the business performance, the shareholder returns, over three years, have been disappointing. Although we'd stop short of calling it inappropriate, we think the CEO compensation is probably more on the generous side of things. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at MGM China Holdings.
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.
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.
