Damon Hininger became the CEO of CoreCivic, Inc. (NYSE:CXW) in 2009, 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 assess whether CoreCivic pays its CEO appropriately, considering recent earnings growth and total shareholder returns.
How Does Total Compensation For Damon Hininger Compare With Other Companies In The Industry?
According to our data, CoreCivic, Inc. has a market capitalization of US$1.0b, and paid its CEO total annual compensation worth US$5.3m over the year to December 2019. Notably, that’s an increase of 30% over the year before. While we always look at total compensation first, our analysis shows that the salary component is less, at US$940k.
For comparison, other companies in the same industry with market capitalizations ranging between US$400m and US$1.6b had a median total CEO compensation of US$3.9m. Accordingly, our analysis reveals that CoreCivic, Inc. pays Damon Hininger north of the industry median. Moreover, Damon Hininger also holds US$2.4m worth of CoreCivic stock directly under their own name.
On an industry level, roughly 15% of total compensation represents salary and 85% is other remuneration. It’s interesting to note that CoreCivic pays out a greater portion of remuneration through salary, compared to the industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
CoreCivic, Inc.’s Growth
CoreCivic, Inc. has reduced its earnings per share by 12% a year over the last three years. In the last year, its revenue is up 2.6%.
Overall this is not a very positive result for shareholders. The modest increase in revenue in the last year isn’t enough to make us overlook the disappointing change in earnings per share. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company’s future earnings..
Has CoreCivic, Inc. Been A Good Investment?
Given the total shareholder loss of 56% over three years, many shareholders in CoreCivic, Inc. are probably rather dissatisfied, to say the least. So shareholders would probably want the company to be lessto generous with CEO compensation.
As we touched on above, CoreCivic, Inc. is currently paying its CEO higher than the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. Disappointingly, share price gains over the last three years have failed to materialize. Arguably worse, we’ve been waiting for positive earnings growth for the last three years. Overall, with such poor performance, shareholder’s would probably have questions if the company decided to give the CEO a raise.
It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company’s key performance areas. That’s why we did our research, and identified 3 warning signs for CoreCivic (of which 1 is concerning!) that you should know about in order to have a holistic understanding of the stock.
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.
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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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