How Much Is Mercer International Inc. (NASDAQ:MERC) Paying Its CEO?
This article will reflect on the compensation paid to David Gandossi who has served as CEO of Mercer International Inc. (NASDAQ:MERC) since 2015. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Check out our latest analysis for Mercer International
Comparing Mercer International Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Mercer International Inc. has a market capitalization of US$465m, and reported total annual CEO compensation of US$1.9m for the year to December 2019. That's a notable decrease of 11% on last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$628k.
On examining similar-sized companies in the industry with market capitalizations between US$200m and US$800m, we discovered that the median CEO total compensation of that group was US$1.7m. This suggests that Mercer International remunerates its CEO largely in line with the industry average. Moreover, David Gandossi also holds US$1.3m worth of Mercer International stock directly under their own name.
Component | 2019 | 2018 | Proportion (2019) |
Salary | US$628k | US$601k | 33% |
Other | US$1.3m | US$1.6m | 67% |
Total Compensation | US$1.9m | US$2.2m | 100% |
On an industry level, around 29% of total compensation represents salary and 71% is other remuneration. Mercer International is paying a higher share of its remuneration through a salary in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at Mercer International Inc.'s Growth Numbers
Mercer International Inc. has reduced its earnings per share by 35% a year over the last three years. In the last year, its revenue is down 15%.
Overall this is not a very positive result for shareholders. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Mercer International Inc. Been A Good Investment?
With a three year total loss of 27% for the shareholders, Mercer International Inc. would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
To Conclude...
As we noted earlier, Mercer International pays its CEO in line with similar-sized companies belonging to the same industry. In the meantime, the company has reported declining EPS growth and shareholder returns over the last three years. We'd stop short of saying compensation is inappropriate, but we would understand if shareholders had questions regarding a future raise.
CEO pay is simply one of the many factors that need to be considered while examining business performance. That's why we did our research, and identified 3 warning signs for Mercer International (of which 1 is concerning!) 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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