How Should Investors React To Alaris Equity Partners Income Trust's (TSE:AD.UN) CEO Pay?

This article will reflect on the compensation paid to Steve King who has served as CEO of Alaris Equity Partners Income Trust (TSE:AD.UN) since 2004. This analysis will also look to assess whether the CEO is appropriately paid, considering recent earnings growth and investor returns for Alaris Equity Partners Income Trust.

Check out our latest analysis for Alaris Equity Partners Income Trust

How Does Total Compensation For Steve King Compare With Other Companies In The Industry?

At the time of writing, our data shows that Alaris Equity Partners Income Trust has a market capitalization of CA$598m, and reported total annual CEO compensation of CA$1.1m for the year to December 2019. We note that's a decrease of 46% compared to last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CA$356k.

For comparison, other companies in the same industry with market capitalizations ranging between CA$259m and CA$1.0b had a median total CEO compensation of CA$2.5m. That is to say, Steve King is paid under the industry median. Furthermore, Steve King directly owns CA$12m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, roughly 75% of total compensation represents salary and 25% is other remuneration. In Alaris Equity Partners Income Trust's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Alaris Equity Partners Income Trust's Growth Numbers

Alaris Equity Partners Income Trust has reduced its earnings per share by 28% a year over the last three years. It saw its revenue drop 64% over the last year.

Overall this is not a very positive result for shareholders. And the fact that revenue is down year on year arguably paints an ugly picture. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Alaris Equity Partners Income Trust Been A Good Investment?

With a three year total loss of 3.3% for the shareholders, Alaris Equity Partners Income Trust would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we touched on above, Alaris Equity Partners Income Trust is currently paying its CEO below the median pay for CEOs of companies belonging to the same industry and with similar market capitalizations. EPS growth has failed to impress us, and the same can be said about shareholder returns. Although we wouldn’t say CEO compensation is high, it’s tough to foresee shareholders warming up to thoughts of a bump anytime soon.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 4 warning signs for Alaris Equity Partners Income Trust (of which 1 makes us a bit uncomfortable!) that you should know about in order to have a holistic understanding of the stock.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

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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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