Bob Johnston has been the CEO of GPT Group (ASX:GPT) since 2015, 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.
See our latest analysis for GPT Group
Comparing GPT Group's CEO Compensation With the industry
Our data indicates that GPT Group has a market capitalization of AU$9.1b, and total annual CEO compensation was reported as AU$3.8m for the year to December 2019. We note that's a small decrease of 3.6% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at AU$1.4m.
On comparing similar companies from the same industry with market caps ranging from AU$5.4b to AU$16b, we found that the median CEO total compensation was AU$3.8m. From this we gather that Bob Johnston is paid around the median for CEOs in the industry. Moreover, Bob Johnston also holds AU$8.0m worth of GPT Group stock directly under their own name, which reveals to us that they have a significant personal stake in the company.
| Component | 2019 | 2018 | Proportion (2019) |
| Salary | AU$1.4m | AU$1.5m | 37% |
| Other | AU$2.4m | AU$2.4m | 63% |
| Total Compensation | AU$3.8m | AU$3.9m | 100% |
Speaking on an industry level, nearly 51% of total compensation represents salary, while the remainder of 49% is other remuneration. GPT Group sets aside a smaller share of compensation for salary, in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.
A Look at GPT Group's Growth Numbers
funds from operations for GPT Group was pretty much the same as they were three years ago, albeit slightly higher. Its revenue is down 1.7% over the previous year.
We would prefer it if there was revenue growth, but the modest FFOgrowth gives us some relief. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has GPT Group Been A Good Investment?
GPT Group has generated a total shareholder return of 1.5% over three years, so most shareholders wouldn't be too disappointed. But they would probably prefer not to see CEO compensation far in excess of the median.
In Summary...
As we touched on above, GPT Group is currently paying a compensation that's close to the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. But the company has failed to produce substantial growth in either FFO or total shareholder return. We'd say that Bob is remunerated reasonably, but shareholders might be looking for better returns before they agree Bob deserves a raise.
CEO pay is simply one of the many factors that need to be considered while examining business performance. In our study, we found 4 warning signs for GPT Group you should be aware of, and 1 of them shouldn't be ignored.
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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About ASX:GPT
GPT Group
GPT is a vertically integrated diversified property group that owns and actively manages a portfolio of high quality Australian retail, office and logistics assets, with assets under management of $32.4 billion.
Average dividend payer and fair value.
