Stock Analysis

This Is Why Plaza Retail REIT's (TSE:PLZ.UN) CEO Compensation Looks Appropriate

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TSX:PLZ.UN
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CEO Michael Zakuta has done a decent job of delivering relatively good performance at Plaza Retail REIT (TSE:PLZ.UN) recently. In light of this performance, CEO compensation will probably not be the main focus for shareholders as they go into the AGM on 27 May 2021. Based on our analysis of the data below, we think CEO compensation seems reasonable for now.

Check out our latest analysis for Plaza Retail REIT

Comparing Plaza Retail REIT's CEO Compensation With the industry

Our data indicates that Plaza Retail REIT has a market capitalization of CA$412m, and total annual CEO compensation was reported as CA$400k for the year to December 2020. This was the same amount the CEO received in the prior year. It is worth noting that the CEO compensation consists entirely of the salary, worth CA$400k.

On comparing similar companies from the same industry with market caps ranging from CA$241m to CA$964m, we found that the median CEO total compensation was CA$506k. This suggests that Plaza Retail REIT remunerates its CEO largely in line with the industry average. Furthermore, Michael Zakuta directly owns CA$18m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20202019Proportion (2020)
Salary CA$400k CA$400k 100%
Other - - -
Total CompensationCA$400k CA$400k100%

Speaking on an industry level, nearly 34% of total compensation represents salary, while the remainder of 66% is other remuneration. Speaking on a company level, Plaza Retail REIT prefers to tread along a traditional path, disbursing all compensation through a salary. If total compensation veers towards salary, it suggests that the variable portion - which is generally tied to performance, is lower.

ceo-compensation
TSX:PLZ.UN CEO Compensation May 20th 2021

Plaza Retail REIT's Growth

Plaza Retail REIT's funds from operations (FFO) grew 1.7% per yearover the last three years. Its revenue is down 5.3% over the previous year.

We would argue that the lack of revenue growth in the last year is less than ideal, but it is good to see a modest FFO growth at least. In conclusion we can't form a strong opinion about business performance yet; but it's one worth watching. 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 Plaza Retail REIT Been A Good Investment?

With a total shareholder return of 16% over three years, Plaza Retail REIT shareholders would, in general, be reasonably content. But they would probably prefer not to see CEO compensation far in excess of the median.

To Conclude...

Plaza Retail REIT rewards its CEO solely through a salary, ignoring non-salary benefits completely. Seeing that the company has put up a decent performance, only a few shareholders, if any at all, might have questions about the CEO pay in the upcoming AGM. In saying that, any proposed increase to CEO compensation will still be assessed on how reasonable it is based on performance and industry benchmarks.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 3 warning signs for Plaza Retail REIT (2 can't be ignored!) that you should be aware of before investing here.

Important note: Plaza Retail REIT is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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