How Should Investors React To Morguard Real Estate Investment Trust's (TSE:MRT.UN) CEO Pay?

By
Simply Wall St
Published
December 15, 2020

This article will reflect on the compensation paid to Kuldip Sahi who has served as CEO of Morguard Real Estate Investment Trust (TSE:MRT.UN) since 2001. This analysis will also assess whether Morguard Real Estate Investment Trust pays its CEO appropriately, considering its funds from operations growth and total shareholder returns.

See our latest analysis for Morguard Real Estate Investment Trust

Comparing Morguard Real Estate Investment Trust's CEO Compensation With the industry

At the time of writing, our data shows that Morguard Real Estate Investment Trust has a market capitalization of CA$344m, and reported total annual CEO compensation of CA$100k for the year to December 2019. That's mostly flat as compared to the prior year's compensation. Notably, the salary of CA$100k is the entirety of the CEO compensation.

In comparison with other companies in the industry with market capitalizations ranging from CA$128m to CA$511m, the reported median CEO total compensation was CA$400k. Accordingly, Morguard Real Estate Investment Trust pays its CEO under the industry median. Moreover, Kuldip Sahi also holds CA$6.6m worth of Morguard 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$100k CA$100k 100%
Other - - -
Total CompensationCA$100k CA$100k100%

On an industry level, around 32% of total compensation represents salary and 68% is other remuneration. On a company level, Morguard Real Estate Investment Trust prefers to reward its CEO through a salary, opting not to pay Kuldip Sahi through non-salary benefits. If salary dominates total compensation, it suggests that CEO compensation is leaning less towards the variable component, which is usually linked with performance.

TSX:MRT.UN CEO Compensation December 15th 2020

Morguard Real Estate Investment Trust's Growth

Morguard Real Estate Investment Trust has reduced its funds from operations (FFO) by 11% per year over the last three years. In the last year, its revenue is down 7.2%.

The decline in FFO is a bit concerning. This is compounded by the fact revenue is actually down on last year. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. Moving away from current form for a second, it could be important to check this free visual depiction of what analysts expect for the future.

Has Morguard Real Estate Investment Trust Been A Good Investment?

With a three year total loss of 48% for the shareholders, Morguard Real Estate Investment Trust would certainly have some dissatisfied shareholders. So shareholders would probably want the company to be lessto generous with CEO compensation.

In Summary...

Morguard Real Estate Investment Trust rewards its CEO solely through a salary, ignoring non-salary benefits completely. As previously discussed, Kuldip is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. Over the last three years, shareholder returns have been downright disappointing, and FFOgrowth has been equally disappointing. Although we wouldn’t say CEO compensation is high, it’s tough to foresee shareholders warming up to thoughts of a bump anytime soon.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We did our research and identified 3 warning signs (and 2 which shouldn't be ignored) in Morguard Real Estate Investment Trust we think you should know about.

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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