We Think Shareholders May Consider Being More Generous With Choice Hotels International, Inc.'s (NYSE:CHH) CEO Compensation Package
Key Insights
- Choice Hotels International will host its Annual General Meeting on 15th of May
- CEO Pat Pacious' total compensation includes salary of US$1.23m
- The total compensation is 40% less than the average for the industry
- Choice Hotels International's total shareholder return over the past three years was 1.1% while its EPS grew by 7.1% over the past three years
Shareholders will be pleased by the robust performance of Choice Hotels International, Inc. (NYSE:CHH) recently and this will be kept in mind in the upcoming AGM on 15th of May. This would also be a chance for them to hear the board review the financial results, discuss future company strategy to further improve the business and vote on any resolutions such as executive remuneration. Here is our take on why we think CEO compensation is fair and may even warrant a raise.
View our latest analysis for Choice Hotels International
How Does Total Compensation For Pat Pacious Compare With Other Companies In The Industry?
According to our data, Choice Hotels International, Inc. has a market capitalization of US$5.9b, and paid its CEO total annual compensation worth US$7.8m over the year to December 2024. Notably, that's an increase of 22% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.2m.
In comparison with other companies in the American Hospitality industry with market capitalizations ranging from US$4.0b to US$12b, the reported median CEO total compensation was US$13m. In other words, Choice Hotels International pays its CEO lower than the industry median. What's more, Pat Pacious holds US$32m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.
| Component | 2024 | 2023 | Proportion (2024) |
| Salary | US$1.2m | US$1.2m | 16% |
| Other | US$6.6m | US$5.2m | 84% |
| Total Compensation | US$7.8m | US$6.4m | 100% |
On an industry level, roughly 17% of total compensation represents salary and 83% is other remuneration. There isn't a significant difference between Choice Hotels International and the broader market, in terms of salary allocation in the overall compensation package. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.
A Look at Choice Hotels International, Inc.'s Growth Numbers
Choice Hotels International, Inc. has seen its earnings per share (EPS) increase by 7.1% a year over the past three years. It achieved revenue growth of 4.1% over the last year.
We would argue that the improvement in revenue is good, but isn't particularly impressive, but it is good to see modest EPS growth. It's clear the performance has been quite decent, but it it falls short of outstanding,based on this information. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has Choice Hotels International, Inc. Been A Good Investment?
Choice Hotels International, Inc. has generated a total shareholder return of 1.1% over three years, so most shareholders wouldn't be too disappointed. Although, there's always room to improve. As a result, investors in the company might be reluctant about agreeing to increase CEO pay in the future, before seeing an improvement on their returns.
In Summary...
Overall, the company hasn't done too poorly performance-wise, but we would like to see some improvement. Assuming the business continues to grow at a good clip, few shareholders would raise any objections to the CEO's remuneration. Rather, investors would more likely want to engage on discussions related to key strategic initiatives and future growth opportunities for the company and set their longer-term expectations.
CEO compensation is a crucial aspect to keep your eyes on but investors also need to keep their eyes open for other issues related to business performance. That's why we did some digging and identified 1 warning sign for Choice Hotels International that you should be aware of before investing.
Important note: Choice Hotels International 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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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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.