In 2007 Ken Moelis was appointed CEO of Moelis & Company (NYSE:MC). This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Then we'll look at a snap shot of the business growth. 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 Ken Moelis's Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Moelis & Company has a market cap of US$2.0b, and reported total annual CEO compensation of US$8.8m for the year to December 2018. While we always look at total compensation first, we note that the salary component is less, at US$400k. We further remind readers that the CEO may face performance requirements to receive the non-salary part of the total compensation. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of US$1.0b to US$3.2b. The median total CEO compensation was US$3.9m.
Thus we can conclude that Ken Moelis receives more in total compensation than the median of a group of companies in the same market, and of similar size to Moelis & Company. However, this doesn't necessarily mean the pay is too high. We can better assess whether the pay is overly generous by looking into the underlying business performance.
The graphic below shows how CEO compensation at Moelis has changed from year to year.
Is Moelis & Company Growing?
On average over the last three years, Moelis & Company has grown earnings per share (EPS) by 15% each year (using a line of best fit). Its revenue is down 6.8% over last year.
This demonstrates that the company has been improving recently. A good result. Revenue growth is a real positive for growth, but ultimately profits are more important. Shareholders might be interested in this free visualization of analyst forecasts.
Has Moelis & Company Been A Good Investment?
With a total shareholder return of 17% over three years, Moelis & Company shareholders would, in general, be reasonably content. 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.
We examined the amount Moelis & Company pays its CEO, and compared it to the amount paid by similar sized companies. We found that it pays well over the median amount paid in the benchmark group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. We also note that, over the same time frame, shareholder returns haven't been bad. You might wish to research management further, but on this analysis, considering the EPS growth, we wouldn't call the CEO pay problematic. So you may want to check if insiders are buying Moelis shares with their own money (free access).
Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies, that have HIGH return on equity and low debt.
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.
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