Michael Landy became the CEO of Monmouth Real Estate Investment Corporation (NYSE:MNR) in 2013. 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 – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Michael Landy’s Compensation Compare With Similar Sized Companies?
According to our data, Monmouth Real Estate Investment Corporation has a market capitalization of US$1.3b, and paid its CEO total annual compensation worth US$1.5m over the year to September 2019. While we always look at total compensation first, we note that the salary component is less, at US$827k. When we examined a selection of companies with market caps ranging from US$1.0b to US$3.2b, we found the median CEO total compensation was US$4.9m.
Next, let’s break down remuneration compositions to understand how the industry and company compare with each other. On a sector level, around 15% of total compensation represents salary and 85% is other remuneration. It’s interesting to note that Monmouth Real Estate Investment pays out a greater portion of remuneration through salary, in comparison to the wider industry.
Most shareholders would consider it a positive that Michael Landy takes less total compensation than the CEOs of most similar size companies, leaving more for shareholders. Though positive, it’s important we delve into the performance of the actual business. The graphic below shows how CEO compensation at Monmouth Real Estate Investment has changed from year to year.
Is Monmouth Real Estate Investment Corporation Growing?
On average over the last three years, Monmouth Real Estate Investment Corporation has shrunk earnings per share by 21% each year (measured with a line of best fit). Its revenue is up 13% over last year.
Few shareholders would be pleased to read that earnings per share are lower over three years. There’s no doubt that the silver lining is that revenue is up. But it isn’t sufficiently fast growth to overlook the fact that earnings per share has gone backwards over three years. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. It could be important to check this free visual depiction of what analysts expect for the future.
Has Monmouth Real Estate Investment Corporation Been A Good Investment?
With a total shareholder return of 3.1% over three years, Monmouth Real Estate Investment Corporation has done okay by shareholders. 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.
It looks like Monmouth Real Estate Investment Corporation pays its CEO less than similar sized companies.
The compensation paid to Michael Landy is lower than is usual at similar sized companies. But the company lacks earnings per share growth, and returns to shareholders are less than stellar. We would like to see EPS growth from the business, although we wouldn’t say the CEO pay is high. On another note, Monmouth Real Estate Investment has 5 warning signs (and 1 which doesn’t sit too well with us) we think you should know about.
If you want to buy a stock that is better than Monmouth Real Estate Investment, this free list of high return, low debt companies is a great place to look.
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