In 2003 Peter Bauer was appointed CEO of Mimecast Limited (NASDAQ:MIME). 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. This process should give us an idea about how appropriately the CEO is paid.
How Does Peter Bauer's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Mimecast Limited has a market cap of US$3.1b, and reported total annual CEO compensation of US$1.7m for the year to March 2019. We think total compensation is more important but we note that the CEO salary is lower, at US$349k. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$2.0b to US$6.4b. The median total CEO compensation was US$4.9m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.
The graphic below shows how CEO compensation at Mimecast has changed from year to year.
Is Mimecast Limited Growing?
Mimecast Limited has reduced its earnings per share by an average of 1.2% a year, over the last three years (measured with a line of best fit). Its revenue is up 26% over 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. These two metric are moving in different directions, so while it's hard to be confident judging performance, we think the stock is worth watching. Shareholders might be interested in this free visualization of analyst forecasts.
Has Mimecast Limited Been A Good Investment?
Most shareholders would probably be pleased with Mimecast Limited for providing a total return of 148% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
Mimecast Limited is currently paying its CEO below what is normal for companies of its size.
It's well worth noting that while Peter Bauer is paid below what is normal at companies of similar size, the returns have been very pleasing, over the last three years. So, while it might be nice to have better EPS growth, on our analysis the CEO compensation is quite modest. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Mimecast (free visualization of insider trades).
If you want to buy a stock that is better than Mimecast, this free list of high return, low debt companies is a great place to look.
If you spot an error that warrants correction, please contact the editor at email@example.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.