Yahoo Finance What We Learned About NRG Energy's (NYSE:NRG) CEO Compensation
Mauricio Gutierrez became the CEO of NRG Energy, Inc. (NYSE:NRG) in 2015, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for NRG Energy.
See our latest analysis for NRG Energy
Comparing NRG Energy, Inc.'s CEO Compensation With the industry
According to our data, NRG Energy, Inc. has a market capitalization of US$8.1b, and paid its CEO total annual compensation worth US$9.1m over the year to December 2019. This means that the compensation hasn't changed much from last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$1.3m.
On comparing similar companies from the same industry with market caps ranging from US$4.0b to US$12b, we found that the median CEO total compensation was US$4.9m. Accordingly, our analysis reveals that NRG Energy, Inc. pays Mauricio Gutierrez north of the industry median. Moreover, Mauricio Gutierrez also holds US$30m worth of NRG Energy stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$1.3m | US$1.2m | 14% |
Other | US$7.8m | US$7.7m | 86% |
Total Compensation | US$9.1m | US$8.9m | 100% |
On an industry level, around 14% of total compensation represents salary and 86% is other remuneration. Although there is a difference in how total compensation is set, NRG Energy more or less reflects the market in terms of setting the salary. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at NRG Energy, Inc.'s Growth Numbers
NRG Energy, Inc.'s earnings per share (EPS) grew 125% per year over the last three years. Its revenue is up 1.0% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's 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 35% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.
In Summary...
As we touched on above, NRG Energy, Inc. is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Importantly though, earnings per share growth and shareholder returns are very impressive over the last three years. Considering such exceptional results for the company, we'd venture to say CEO compensation is fair. And given most shareholders are probably very happy with recent returns, they might even think that Mauricio deserves a raise!
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 4 warning signs for NRG Energy (of which 2 shouldn't be ignored!) that you should know about in order to have a holistic understanding of the stock.
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.
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