In 2013 Paul McDermott was appointed CEO of Washington Real Estate Investment Trust (NYSE:WRE). First, this article will compare CEO compensation with compensation at similar sized companies. Then we'll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. This process should give us an idea about how appropriately the CEO is paid.
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How Does Paul McDermott's Compensation Compare With Similar Sized Companies?
At the time of writing our data says that Washington Real Estate Investment Trust has a market cap of US$2.2b, and is paying total annual CEO compensation of US$3.5m. (This is based on the year to December 2018). That's below the compensation, last year. We think total compensation is more important but we note that the CEO salary is lower, at US$650k. We examined companies with market caps from US$1.0b to US$3.2b, and discovered that the median CEO total compensation of that group was US$4.1m.
So Paul McDermott receives a similar amount to the median CEO pay, amongst the companies we looked at. While this data point isn't particularly informative alone, it gains more meaning when considered with business performance.
The graphic below shows how CEO compensation at Washington Real Estate Investment Trust has changed from year to year.
Is Washington Real Estate Investment Trust Growing?
Over the last three years Washington Real Estate Investment Trust has shrunk its earnings per share by an average of 68% per year (measured with a line of best fit). In the last year, its revenue changed by just 0.8%.
Sadly for shareholders, earnings per share are actually down, over three years. And the flat revenue is seriously uninspiring. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has Washington Real Estate Investment Trust Been A Good Investment?
Washington Real Estate Investment Trust has generated a total shareholder return of 10% over three years, so most shareholders would 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.
Paul McDermott is paid around what is normal the leaders of comparable size companies.
The company isn't growing earnings per share, and nor have the total returns inspired us. We wouldn't say the CEO pay is too high, but one might argue that the company should improve returns to shareholders before increasing it. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Washington Real Estate Investment Trust (free visualization of insider trades).
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. 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. Thank you for reading.