Yahoo Finance Is Merlin Entertainments plc's (LON:MERL) CEO Overpaid Relative To Its Peers?
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In 1999 Nick Varney was appointed CEO of Merlin Entertainments plc (LON:MERL). 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. And finally - as a second measure of performance - we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
Check out our latest analysis for Merlin Entertainments
How Does Nick Varney's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Merlin Entertainments plc has a market cap of UK£3.7b, and is paying total annual CEO compensation of UK£1.5m. (This is based on the year to December 2018). That's a notable increase of 64% on last year. We think total compensation is more important but we note that the CEO salary is lower, at UK£607k. When we examined a selection of companies with market caps ranging from UK£3.1b to UK£9.2b, we found the median CEO total compensation was UK£2.5m.
Most shareholders would consider it a positive that Nick Varney takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. While this is a good thing, you'll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at Merlin Entertainments has changed from year to year.
Is Merlin Entertainments plc Growing?
Merlin Entertainments plc has increased its earnings per share (EPS) by an average of 7.2% a year, over the last three years (using a line of best fit). Its revenue is up 5.9% over last year.
I would argue that the improvement in revenue isn't particularly impressive, but the modest improvement in EPS is good. So there are some positives here, but not enough to earn high praise. It could be important to check this free visual depiction of what analysts expect for the future.
Has Merlin Entertainments plc Been A Good Investment?
Given the total loss of 11% over three years, many shareholders in Merlin Entertainments plc 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...
Merlin Entertainments plc is currently paying its CEO below what is normal for companies of its size.
It's well worth noting that while Nick Varney is paid less than most company leaders (at similar sized companies), performance has been somewhat uninspiring, and total returns have been lacking. So while shareholders shouldn't be overly concerned about CEO compensation, they would probably like to see improved shareholder returns before seeing a pay increase. If you think CEO compensation levels are interesting you will probably really like this free visualization of insider trading at Merlin Entertainments.
If you want to buy a stock that is better than Merlin Entertainments, this free list of high return, low debt companies is a great place to look.
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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. Thank you for reading.
