How Much Did H&R Real Estate Investment Trust's (TSE:HR.UN) CEO Pocket Last Year?

By
Simply Wall St
Published
July 26, 2020
TSX:HR.UN
Source: Shutterstock

This article will reflect on the compensation paid to Tom Hofstedter who has served as CEO of H&R Real Estate Investment Trust (TSE:HR.UN) since 1996. This analysis will also assess whether H&R Real Estate Investment Trust pays its CEO appropriately, considering recent earnings growth and total shareholder returns.

Check out our latest analysis for H&R Real Estate Investment Trust

Comparing H&R Real Estate Investment Trust's CEO Compensation With the industry

According to our data, H&R Real Estate Investment Trust has a market capitalization of CA$2.9b, and paid its CEO total annual compensation worth CA$3.9m over the year to December 2019. We note that's a small decrease of 7.0% on last year. We think total compensation is more important but our data shows that the CEO salary is lower, at CA$1.2m.

On examining similar-sized companies in the industry with market capitalizations between CA$1.3b and CA$4.3b, we discovered that the median CEO total compensation of that group was CA$1.8m. This suggests that Tom Hofstedter is paid more than the median for the industry. Moreover, Tom Hofstedter also holds CA$34m worth of H&R Real Estate Investment Trust stock directly under their own name, which reveals to us that they have a significant personal stake in the company.

Component20192018Proportion (2019)
Salary CA$1.2m CA$1.2m 31%
Other CA$2.7m CA$2.9m 69%
Total CompensationCA$3.9m CA$4.1m100%

On an industry level, roughly 33% of total compensation represents salary and 67% is other remuneration. Although there is a difference in how total compensation is set, H&R Real Estate Investment Trust more or less reflects the market in terms of setting the salary. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

ceo-compensation
TSX:HR.UN CEO Compensation July 27th 2020

H&R Real Estate Investment Trust's Growth

H&R Real Estate Investment Trust has reduced its earnings per share by 51% a year over the last three years. In the last year, its revenue is up 12%.

The decline in earnings is a bit concerning. 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. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. 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 H&R Real Estate Investment Trust Been A Good Investment?

With a three year total loss of 44% for the shareholders, H&R Real Estate Investment Trust would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As previously discussed, Tom is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. Arguably worse, we've been waiting for positive earnings growth for the last three years. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. That's why we did our research, and identified 2 warning signs for H&R Real Estate Investment Trust (of which 1 makes us a bit uncomfortable!) that you should know about in order to have a holistic understanding of the stock.

Switching gears from H&R Real Estate Investment Trust, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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