Don Wood has been the CEO of Federal Realty Investment Trust (NYSE:FRT) since 2003. First, this article will compare CEO compensation with compensation at other large companies. After that, we will consider the growth in the business. Third, we’ll reflect on the total return to shareholders over three years, as a second measure of business performance. This process should give us an idea about how appropriately the CEO is paid.
How Does Don Wood’s Compensation Compare With Similar Sized Companies?
At the time of writing, our data says that Federal Realty Investment Trust has a market cap of US$9.8b, and reported total annual CEO compensation of US$7.5m for the year to December 2018. We think total compensation is more important but we note that the CEO salary is lower, at US$950k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. We looked at a group of companies with market capitalizations over US$8.0b and the median CEO total compensation was US$11m. There aren’t very many mega-cap companies, so we had to take a wide range to get a meaningful comparison figure.
A first glance this seems like a real positive for shareholders, since Don Wood is paid less than the average total compensation paid by other large companies. While this is a good thing, you’ll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at Federal Realty Investment Trust has changed from year to year.
Is Federal Realty Investment Trust Growing?
Federal Realty Investment Trust has reduced its earnings per share by an average of 3.5% a year, over the last three years (measured with a line of best fit). In the last year, its revenue is up 3.2%.
Sadly for shareholders, earnings per share are actually down, over three years. The modest increase in revenue in the last year isn’t enough to make me overlook the disappointing change in earnings per share. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Shareholders might be interested in this free visualization of analyst forecasts.
Has Federal Realty Investment Trust Been A Good Investment?
With a three year total loss of 1.3%, Federal Realty Investment Trust would certainly have some dissatisfied shareholders. This suggests it would be unwise for the company to pay the CEO too generously.
It appears that Federal Realty Investment Trust remunerates its CEO below most large companies.
Shareholders should note that compensation for Don Wood is below the median of larger companies. But then, EPS growth is lacking and so are the returns to shareholders. Considering all these factors, we’d stop short of saying the CEO pay is too high, but we don’t think shareholders would want to see a pay rise before business performance improves. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Federal Realty Investment Trust (free visualization of insider trades).
Important note: Federal Realty Investment Trust may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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.
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