Shareholders of Brookdale Senior Living Inc. (NYSE:BKD) will have been dismayed by the negative share price return over the last three years. What is concerning is that despite positive EPS growth, the share price has not tracked the trend in fundamentals. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 17 June 2021. They could also try to influence management and firm direction through voting on resolutions such as executive remuneration and other company matters. We discuss below why we think shareholders should be cautious of approving a raise for the CEO at the moment.
Comparing Brookdale Senior Living Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that Brookdale Senior Living Inc. has a market capitalization of US$1.4b, and reported total annual CEO compensation of US$7.1m for the year to December 2020. We note that's an increase of 12% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$938k.
In comparison with other companies in the industry with market capitalizations ranging from US$1.0b to US$3.2b, the reported median CEO total compensation was US$2.5m. Accordingly, our analysis reveals that Brookdale Senior Living Inc. pays Cindy Baier north of the industry median. Furthermore, Cindy Baier directly owns US$3.2m worth of shares in the company, implying that they are deeply invested in the company's success.
Speaking on an industry level, nearly 19% of total compensation represents salary, while the remainder of 81% is other remuneration. In Brookdale Senior Living's case, non-salary compensation represents a greater slice of total remuneration, in comparison to the broader industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.
Brookdale Senior Living Inc.'s Growth
Over the past three years, Brookdale Senior Living Inc. has seen its earnings per share (EPS) grow by 89% per year. It saw its revenue drop 16% over the last year.
Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's always a tough situation when revenues are not growing, but ultimately profits are more important. 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 Brookdale Senior Living Inc. Been A Good Investment?
Given the total shareholder loss of 21% over three years, many shareholders in Brookdale Senior Living Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
Shareholders have not seen their shares grow in value, rather they have seen their shares decline. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would be keen to know what's holding the stock back when earnings have grown. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.
While CEO pay is an important factor to be aware of, there are other areas that investors should be mindful of as well. That's why we did some digging and identified 1 warning sign for Brookdale Senior Living that you should be aware of before investing.
Important note: Brookdale Senior Living 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. 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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