How Should Investors Feel About Fronsac Real Estate Investment Trust's (CVE:FRO.UN) CEO Remuneration?

By
Simply Wall St
Published
September 28, 2020
TSXV:FRO.UN

This article will reflect on the compensation paid to Jason Parravano who has served as CEO of Fronsac Real Estate Investment Trust (CVE:FRO.UN) since 2017. This analysis will also look to assess whether the CEO is appropriately paid, considering recent funds from operations growth and investor returns for Fronsac Real Estate Investment Trust.

View our latest analysis for Fronsac Real Estate Investment Trust

How Does Total Compensation For Jason Parravano Compare With Other Companies In The Industry?

Our data indicates that Fronsac Real Estate Investment Trust has a market capitalization of CA$88m, and total annual CEO compensation was reported as CA$154k for the year to December 2019. That's a modest increase of 4.6% on the prior year. In particular, the salary of CA$141.8k, makes up a huge portion of the total compensation being paid to the CEO.

On comparing similar-sized companies in the industry with market capitalizations below CA$268m, we found that the median total CEO compensation was CA$347k. That is to say, Jason Parravano is paid under the industry median. What's more, Jason Parravano holds CA$448k worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20192018Proportion (2019)
Salary CA$142k CA$135k 92%
Other CA$12k CA$12k 8%
Total CompensationCA$154k CA$147k100%

Speaking on an industry level, nearly 33% of total compensation represents salary, while the remainder of 67% is other remuneration. According to our research, Fronsac Real Estate Investment Trust has allocated a higher percentage of pay to salary in comparison to the wider industry. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

ceo-compensation
TSXV:FRO.UN CEO Compensation September 28th 2020

A Look at Fronsac Real Estate Investment Trust's Growth Numbers

Over the past three years, Fronsac Real Estate Investment Trust has seen its funds from operations (FFO) grow by 55% per year. In the last year, its revenue is up 53%.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. Most shareholders would be pleased to see strong revenue growth combined with FFO growth. This combo suggests a fast growing business. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Fronsac Real Estate Investment Trust Been A Good Investment?

With a total shareholder return of 25% over three years, Fronsac Real Estate Investment Trust shareholders would, in general, be reasonably content. But they probably wouldn't be so happy as to think the CEO should be paid more than is normal, for companies around this size.

In Summary...

As previously discussed, Jason is compensated less than what is normal for CEOs of companies of similar size, and which belong to the same industry. At the same time, FFO growth has been exceptional over the past three years. Unfortunately, although shareholder returns are growing, they haven't impressed us as much in comparison, over the same period. Shareholder returns could be better but we're pleased with the positive FFO growth. As a result of these considerations, CEO compensation seems quite appropriate.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. In our study, we found 5 warning signs for Fronsac Real Estate Investment Trust you should be aware of, and 1 of them is a bit concerning.

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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