A Quick Analysis On GPT Group’s (ASX:GPT) CEO Compensation

Bob Johnston became the CEO of GPT Group (ASX:GPT) in 2015, 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.

View our latest analysis for GPT Group

How Does Total Compensation For Bob Johnston Compare With Other Companies In The Industry?

According to our data, GPT Group has a market capitalization of AU$7.9b, and paid its CEO total annual compensation worth AU$3.8m over the year to December 2019. That’s a slight decrease of 3.6% on the prior year. While this analysis focuses on total compensation, it’s worth acknowledging that the salary portion is lower, valued at AU$1.4m.

In comparison with other companies in the industry with market capitalizations ranging from AU$5.6b to AU$17b, the reported median CEO total compensation was AU$4.3m. From this we gather that Bob Johnston is paid around the median for CEOs in the industry. Moreover, Bob Johnston also holds AU$6.8m worth of GPT Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20192018Proportion (2019)
Salary AU$1.4m AU$1.5m 37%
Other AU$2.4m AU$2.4m 63%
Total CompensationAU$3.8m AU$3.9m100%

Speaking on an industry level, nearly 44% of total compensation represents salary, while the remainder of 56% is other remuneration. In GPT Group’s case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It’s important to note that a slant towards non-salary compensation suggests that total pay is tied to the company’s performance.

ASX:GPT CEO Compensation August 13th 2020

A Look at GPT Group’s Growth Numbers

Over the last three years, GPT Group has shrunk its earnings per share by 82% per year. In the last year, its revenue is down 1.7%.

Few shareholders would be pleased to read that earnings have declined. And the fact that revenue is down year on year arguably paints an ugly picture. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 GPT Group Been A Good Investment?

Since shareholders would have lost about 7.3% over three years, some GPT Group investors would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.

In Summary…

As we noted earlier, GPT Group pays its CEO in line with similar-sized companies belonging to the same industry. In the meantime, the company has reported declining earnings 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.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company’s key performance areas. In our study, we found 4 warning signs for GPT Group you should be aware of, and 1 of them is significant.

Switching gears from GPT Group, 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.

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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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