Is Property For Industry Limited (NZSE:PFI) Excessively Paying Its CEO?

Greg Reidy has been the CEO of Property For Industry Limited (NZSE:PFI) since 2012. First, this article will compare CEO compensation with compensation at similar sized companies. After that, we will consider the growth in the business. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. This process should give us an idea about how appropriately the CEO is paid.

Check out our latest analysis for Property For Industry

How Does Greg Reidy’s Compensation Compare With Similar Sized Companies?

Our data indicates that Property For Industry Limited is worth NZ$873m, and total annual CEO compensation is NZ$268k. As part of our analysis we looked at companies in the same jurisdiction, with market capitalizations of NZ$305m to NZ$1.2b. The median total CEO compensation was NZ$685k.

This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. However, before we heap on the praise, we should delve deeper to understand business performance.

You can see, below, how CEO compensation at Property For Industry has changed over time.

NZSE:PFI CEO Compensation October 23rd 18
NZSE:PFI CEO Compensation October 23rd 18

Is Property For Industry Limited Growing?

Over the last three years Property For Industry Limited has shrunk its earnings per share by an average of 3.9% per year. Its revenue is up 2.7% over last year.

Sadly for shareholders, earnings per share are actually down, over three years. The modest increase in revenue in the last year isn’t enough to make me overlook the disappointing change in earnings per share. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration.

You might want to check this free visual report on analyst forecasts for future earnings.

Has Property For Industry Limited Been A Good Investment?

Most shareholders would probably be pleased with Property For Industry Limited for providing a total return of 34% over three years. This strong performance might mean some shareholders don’t mind if the CEO is paid more than is normal for a company of its size.

In Summary…

It appears that Property For Industry Limited remunerates its CEO below most similar sized companies.

It’s well worth noting that while Greg Reidy is paid less than most company leaders (at similar sized companies), there isn’t much EPS growth. Having said that, returns to shareholders have been great. Although we could see higher EPS growth, we’d argue the remuneration is not an issue, based on these observations. Whatever your view on compensation, you might want to check if insiders are buying or selling Property For Industry Limited shares (free trial).

Or you might prefer examine intently this intuitive graph showing past earnings and revenue.

To help readers see past the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price-sensitive company announcements.

The author is an independent contributor and at the time of publication had no position in the stocks mentioned. For errors that warrant correction please contact the editor at editorial-team@simplywallst.com.