Yahoo Finance Does Meritage Homes Corporation's (NYSE:MTH) CEO Pay Matter?
In 1996 Steve Hilton was appointed CEO of Meritage Homes Corporation (NYSE:MTH). 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 method should give us information to assess how appropriately the company pays the CEO.
View our latest analysis for Meritage Homes
How Does Steve Hilton's Compensation Compare With Similar Sized Companies?
According to our data, Meritage Homes Corporation has a market capitalization of US$2.5b, and paid its CEO total annual compensation worth US$7.9m over the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$1.0m. Importantly, there may be performance hurdles relating to the non-salary component of the total compensation. When we examined a selection of companies with market caps ranging from US$2.0b to US$6.4b, we found the median CEO total compensation was US$5.1m.
Thus we can conclude that Steve Hilton receives more in total compensation than the median of a group of companies in the same market, and of similar size to Meritage Homes Corporation. However, this doesn't necessarily mean the pay is too high. A closer look at the performance of the underlying business will give us a better idea about whether the pay is particularly generous.
The graphic below shows how CEO compensation at Meritage Homes has changed from year to year.
Is Meritage Homes Corporation Growing?
On average over the last three years, Meritage Homes Corporation has grown earnings per share (EPS) by 17% each year (using a line of best fit). In the last year, its revenue is up 2.1%.
This shows that the company has improved itself over the last few years. Good news for shareholders. It's good to see a bit of revenue growth, as this suggests the business is able to grow sustainably. Shareholders might be interested in this free visualization of analyst forecasts.
Has Meritage Homes Corporation Been A Good Investment?
Most shareholders would probably be pleased with Meritage Homes Corporation for providing a total return of 72% 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...
We examined the amount Meritage Homes Corporation pays its CEO, and compared it to the amount paid by similar sized companies. As discussed above, we discovered that the company pays more than the median of that group.
Importantly, though, the company has impressed with its earnings per share growth, over three years. On top of that, in the same period, returns to shareholders have been great. As a result of this good performance, the CEO remuneration may well be quite reasonable. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Meritage Homes (free visualization of insider trades).
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 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.
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.
