Paul Smithers became the CEO of Innovative Industrial Properties, Inc. (NYSE:IIPR) in 2016, 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 look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Innovative Industrial Properties.
Comparing Innovative Industrial Properties, Inc.’s CEO Compensation With the industry
Our data indicates that Innovative Industrial Properties, Inc. has a market capitalization of US$2.4b, and total annual CEO compensation was reported as US$1.4m for the year to December 2019. Notably, that’s an increase of 31% over the year before. While this analysis focuses on total compensation, it’s worth acknowledging that the salary portion is lower, valued at US$400k.
For comparison, other companies in the same industry with market capitalizations ranging between US$2.0b and US$6.4b had a median total CEO compensation of US$5.2m. This suggests that Paul Smithers is paid below the industry median. Moreover, Paul Smithers also holds US$4.5m worth of Innovative Industrial Properties stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
Speaking on an industry level, nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. It’s interesting to note that Innovative Industrial Properties 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.
Innovative Industrial Properties, Inc.’s Growth
Innovative Industrial Properties, Inc.’s earnings per share (EPS) grew 107% per year over the last three years. Its revenue is up 208% over the last year.
Shareholders would be glad to know that the company has improved itself over the last few years. The combination of strong revenue growth with medium-term earnings per share improvement certainly points to the kind of growth we like to see. 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 Innovative Industrial Properties, Inc. Been A Good Investment?
Most shareholders would probably be pleased with Innovative Industrial Properties, Inc. for providing a total return of 612% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.
As we touched on above, Innovative Industrial Properties, Inc. is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. When taking into account the company’s strong earnings growth over the past three years, it appears CEO compensation is modest. And given most shareholders are probably very happy with recent shareholder returns, they might even think Paul deserves a raise!
We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for Innovative Industrial Properties (1 doesn’t sit too well with us!) that you should be aware of before investing here.
Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.
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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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