Jason Fox became the CEO of W. P. Carey Inc. (NYSE:WPC) in 2018, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the earnings and shareholder returns of the company.
Comparing W. P. Carey Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that W. P. Carey Inc. has a market capitalization of US$13b, and reported total annual CEO compensation of US$6.9m for the year to December 2019. Notably, that's an increase of 49% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$750k.
For comparison, other companies in the industry with market capitalizations above US$8.0b, reported a median total CEO compensation of US$6.9m. This suggests that W. P. Carey remunerates its CEO largely in line with the industry average. Furthermore, Jason Fox directly owns US$30m worth of shares in the company, implying that they are deeply invested in the company's success.
Talking in terms of the industry, salary represented approximately 15% of total compensation out of all the companies we analyzed, while other remuneration made up 85% of the pie. In W. P. Carey's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
W. P. Carey Inc.'s Growth
W. P. Carey Inc. has reduced its earnings per share by 11% a year over the last three years. Its revenue is up 20% over the last year.
The reduction in earnings, over three years, is arguably concerning. But in contrast the revenue growth is strong, suggesting future potential for earnings growth. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.
Has W. P. Carey Inc. Been A Good Investment?
With a total shareholder return of 24% over three years, W. P. Carey Inc. shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
As we noted earlier, W. P. Carey pays its CEO in line with similar-sized companies belonging to the same industry. But revenue growth over the last year can't be ignored. Shareholder returns, in comparison, have not been as impressive during the same period. An additional worry is earnings per share, which has posted negative growth in the previous three years. We wouldn't say compensation is inappropriate considering the stable performance, but shareholders might want to see some better numbers before warming to the idea of a bump.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. We identified 3 warning signs for W. P. Carey (1 is a bit unpleasant!) that you should be aware of before investing here.
Switching gears from W. P. Carey, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.
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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