Steve Gillard has been the CEO of GDI Property Group (ASX:GDI) since 2013, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the funds from operations and shareholder returns of the company.
Check out our latest analysis for GDI Property Group
Comparing GDI Property Group's CEO Compensation With the industry
According to our data, GDI Property Group has a market capitalization of AU$626m, and paid its CEO total annual compensation worth AU$1.6m over the year to June 2020. Notably, that's a decrease of 13% over the year before. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at AU$740k.
On examining similar-sized companies in the industry with market capitalizations between AU$261m and AU$1.0b, we discovered that the median CEO total compensation of that group was AU$878k. This suggests that Steve Gillard is paid more than the median for the industry. What's more, Steve Gillard holds AU$35m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2020 | 2019 | Proportion (2020) |
| Salary | AU$740k | AU$740k | 45% |
| Other | AU$900k | AU$1.2m | 55% |
| Total Compensation | AU$1.6m | AU$1.9m | 100% |
On an industry level, around 54% of total compensation represents salary and 46% is other remuneration. GDI Property Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
A Look at GDI Property Group's Growth Numbers
GDI Property Group's funds from operations stayed pretty flat over the last three years. It saw its revenue drop 9.6% over the last year.
Its a bit disappointing to see that the company has failed to grow its FFO. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. 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 GDI Property Group Been A Good Investment?
GDI Property Group has generated a total shareholder return of 10% over three years, so most shareholders would be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.
In Summary...
As we noted earlier, GDI Property Group pays its CEO higher than the norm for similar-sized companies belonging to the same industry. This doesn't look great when you realize that the company has been suffering from negative FFO growth for the last three years. And while shareholder returns have been respectable, they have hardly been superb. So you can understand why we do not think CEO compensation is particularly modest!
CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for GDI Property Group that investors should look into moving forward.
Important note: GDI Property Group is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.
If you’re looking to trade GDI Property Group, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account. Promoted
New: Manage All Your Stock Portfolios in One Place
We've created the ultimate portfolio companion for stock investors, and it's free.
• Connect an unlimited number of Portfolios and see your total in one currency
• Be alerted to new Warning Signs or Risks via email or mobile
• Track the Fair Value of your stocks
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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
About ASX:GDI
GDI Property Group
GDI is an integrated, internally managed commercial property investor with capabilities in the identification and execution of acquisition opportunities, and then the ownership, management, development, refurbishment, leasing, and syndication of assets.
Proven track record average dividend payer.
