Yahoo Finance Should Shareholders Reconsider Marcus & Millichap, Inc.'s (NYSE:MMI) CEO Compensation Package?
Key Insights
Marcus & Millichap's Annual General Meeting to take place on 2nd of May
CEO Hessam Nadji's total compensation includes salary of US$700.0k
The overall pay is 35% above the industry average
Marcus & Millichap's EPS declined by 31% over the past three years while total shareholder loss over the past three years was 5.1%
Marcus & Millichap, Inc. (NYSE:MMI) has not performed well recently and CEO Hessam Nadji will probably need to up their game. At the upcoming AGM on 2nd of May, shareholders can hear from the board including their plans for turning around performance. They will also get a chance to influence managerial decision-making through voting on resolutions such as executive remuneration, which may impact firm value in the future. We present the case why we think CEO compensation is out of sync with company performance.
Check out our latest analysis for Marcus & Millichap
Comparing Marcus & Millichap, Inc.'s CEO Compensation With The Industry
According to our data, Marcus & Millichap, Inc. has a market capitalization of US$1.2b, and paid its CEO total annual compensation worth US$10m over the year to December 2023. We note that's an increase of 38% above last year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$700k.
On comparing similar companies from the American Real Estate industry with market caps ranging from US$1.0b to US$3.2b, we found that the median CEO total compensation was US$7.7m. This suggests that Hessam Nadji is paid more than the median for the industry. Moreover, Hessam Nadji also holds US$7.8m worth of Marcus & Millichap stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Component | 2023 | 2022 | Proportion (2023) |
Salary | US$700k | US$675k | 7% |
Other | US$9.7m | US$6.9m | 93% |
Total Compensation | US$10m | US$7.5m | 100% |
Speaking on an industry level, nearly 28% of total compensation represents salary, while the remainder of 72% is other remuneration. In Marcus & Millichap's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
Marcus & Millichap, Inc.'s Growth
Over the last three years, Marcus & Millichap, Inc. has shrunk its earnings per share by 31% per year. Its revenue is down 50% over the previous year.
Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.
Has Marcus & Millichap, Inc. Been A Good Investment?
Given the total shareholder loss of 5.1% over three years, many shareholders in Marcus & Millichap, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be less generous with CEO compensation.
To Conclude...
Given that shareholders haven't seen any positive returns on their investment, not to mention the lack of earnings growth, this may suggest that few of them would be willing to award the CEO with a pay rise. At the upcoming AGM, the board will get the chance to explain the steps it plans to take to improve business performance.
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 2 warning signs for Marcus & Millichap you should be aware of, and 1 of them is a bit concerning.
Important note: Marcus & Millichap is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.
