Ken Moelis became the CEO of Moelis & Company (NYSE:MC) in 2007, 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 evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing Moelis & Company's CEO Compensation With the industry
According to our data, Moelis & Company has a market capitalization of US$2.3b, and paid its CEO total annual compensation worth US$5.1m over the year to December 2019. Notably, that's a decrease of 42% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$400k.
On comparing similar companies from the same industry with market caps ranging from US$1.0b to US$3.2b, we found that the median CEO total compensation was US$5.7m. From this we gather that Ken Moelis is paid around the median for CEOs in the industry. Moreover, Ken Moelis also holds US$29m worth of Moelis stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
On an industry level, around 15% of total compensation represents salary and 85% is other remuneration. Moelis sets aside a smaller share of compensation for 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.
Moelis & Company's Growth
Moelis & Company has reduced its earnings per share by 12% a year over the last three years. It achieved revenue growth of 4.2% over the last year.
Overall this is not a very positive result for shareholders. And the modest revenue growth over 12 months isn't much comfort against the reduced EPS. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Moelis & Company Been A Good Investment?
Moelis & Company has not done too badly by shareholders, with a total return of 4.7%, 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 touched on above, Moelis & Company is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Moelis has had a poor showing when it comes to EPS growth, and it's tough to say that shareholder returns have done much to excite us. This doesn't compare well with CEO compensation, which is largely in line with the industry median. Considering all of this, we can't say the CEO is underpaid, and moving forward shareholders will likely want to see higher growth to justify any raise.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 5 warning signs (and 1 which makes us a bit uncomfortable) in Moelis we think you should know about.
Switching gears from Moelis, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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.
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