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How Should Investors React To MGE Energy's (NASDAQ:MGEE) CEO Pay?

Jeff Keebler became the CEO of MGE Energy, Inc. (NASDAQ:MGEE) in 2017, 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 assess whether MGE Energy pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

See our latest analysis for MGE Energy

Comparing MGE Energy, Inc.'s CEO Compensation With the industry

Our data indicates that MGE Energy, Inc. has a market capitalization of US$2.4b, and total annual CEO compensation was reported as US$2.4m for the year to December 2019. Notably, that's an increase of 59% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$592k.

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For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$4.1m. This suggests that Jeff Keebler is paid below the industry median. Furthermore, Jeff Keebler directly owns US$156k worth of shares in the company.

Component

2019

2018

Proportion (2019)

Salary

US$592k

US$521k

25%

Other

US$1.8m

US$981k

75%

Total Compensation

US$2.4m

US$1.5m

100%

Speaking on an industry level, nearly 14% of total compensation represents salary, while the remainder of 86% is other remuneration. It's interesting to note that MGE Energy pays out a greater portion of remuneration through salary, compared to the industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
ceo-compensation

A Look at MGE Energy, Inc.'s Growth Numbers

Over the past three years, MGE Energy, Inc. has seen its earnings per share (EPS) grow by 5.9% per year. It saw its revenue drop 3.8% over the last year.

We would prefer it if there was revenue growth, but it is good to see a modest EPS growth at least. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has MGE Energy, Inc. Been A Good Investment?

MGE Energy, Inc. has not done too badly by shareholders, with a total return of 6.9%, over three years. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

As we touched on above, MGE Energy, Inc. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. At the same time, EPS growth and shareholder returns, though solid, have not been very strong over the last three years. Therefore, despite CEO compensation being fair by all accounts, shareholders will probably want to see more growth before they decide that Jeff deserves a raise.

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 MGE Energy that investors should look into moving forward.

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 editorial-team@simplywallst.com.