How Should Investors React To Killam Apartment Real Estate Investment Trust’s (TSE:KMP.UN) CEO Pay?

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Philip Fraser became the CEO of Killam Apartment Real Estate Investment Trust (TSE:KMP.UN) in 2000. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.

View our latest analysis for Killam Apartment Real Estate Investment Trust

How Does Philip Fraser’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that Killam Apartment Real Estate Investment Trust has a market cap of CA$1.8b, and is paying total annual CEO compensation of CA$1.8m. (This number is for the twelve months until December 2018). While we always look at total compensation first, we note that the salary component is less, at CA$650k. We looked at a group of companies with market capitalizations from CA$1.3b to CA$4.2b, and the median CEO total compensation was CA$2.8m.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you’ll need to understand the business better before you can form an opinion.

You can see, below, how CEO compensation at Killam Apartment Real Estate Investment Trust has changed over time.

TSX:KMP.UN CEO Compensation, July 5th 2019
TSX:KMP.UN CEO Compensation, July 5th 2019

Is Killam Apartment Real Estate Investment Trust Growing?

On average over the last three years, Killam Apartment Real Estate Investment Trust has grown earnings per share (EPS) by 26% each year (using a line of best fit). It achieved revenue growth of 16% over the last year.

This shows that the company has improved itself over the last few years. Good news for shareholders. It’s also good to see decent revenue growth in the last year, suggesting the business is healthy and growing.

Has Killam Apartment Real Estate Investment Trust Been A Good Investment?

Boasting a total shareholder return of 68% over three years, Killam Apartment Real Estate Investment Trust has done well by shareholders. This strong performance might mean some shareholders don’t mind if the CEO were to be paid more than is normal for a company of its size.

In Summary…

It appears that Killam Apartment Real Estate Investment Trust remunerates its CEO below most similar sized companies. Since the business is growing, many would argue this suggests the pay is modest. The strong history of shareholder returns might even have some thinking that Philip Fraser deserves a raise!

Most shareholders like to see a modestly paid CEO combined with strong performance by the company. It would be even more positive if company insiders are buying shares. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling Killam Apartment Real Estate Investment Trust (free visualization of insider trades).

Important note: Killam Apartment Real Estate 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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Thank you for reading.