Stock Analysis

How Should Investors Feel About CareTrust REIT's (NASDAQ:CTRE) CEO Remuneration?

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Greg Stapley has been the CEO of CareTrust REIT, Inc. (NASDAQ:CTRE) since 2013, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the funds from operations and shareholder returns of the company.

Check out our latest analysis for CareTrust REIT

Comparing CareTrust REIT, Inc.'s CEO Compensation With the industry

According to our data, CareTrust REIT, Inc. has a market capitalization of US$1.9b, and paid its CEO total annual compensation worth US$3.2m over the year to December 2019. That's a modest increase of 3.6% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$595k.

On comparing similar companies from the same industry with market caps ranging from US$1.0b to US$3.2b, we found that the median CEO total compensation was US$4.6m. That is to say, Greg Stapley is paid under the industry median. What's more, Greg Stapley holds US$18m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20192018Proportion (2019)
Salary US$595k US$545k 19%
Other US$2.6m US$2.5m 81%
Total CompensationUS$3.2m US$3.1m100%

Speaking on an industry level, nearly 15% of total compensation represents salary, while the remainder of 85% is other remuneration. According to our research, CareTrust REIT has allocated a higher percentage of pay to salary in comparison to the wider industry. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

NasdaqGS:CTRE CEO Compensation December 3rd 2020

A Look at CareTrust REIT, Inc.'s Growth Numbers

Over the past three years, CareTrust REIT, Inc. has seen its funds from operations (FFO) grow by 23% per year. Its revenue is up 12% over the last year.

Shareholders would be glad to know that the company has improved itself over the last few years. It's a real positive to see this sort of revenue growth in a single year. That suggests a healthy and growing business. 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 CareTrust REIT, Inc. Been A Good Investment?

CareTrust REIT, Inc. has generated a total shareholder return of 33% over three years, so most shareholders would be reasonably content. But they probably don't want to see the CEO paid more than is normal for companies around the same size.

To Conclude...

As we noted earlier, CareTrust REIT pays its CEO lower than the norm for similar-sized companies belonging 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. We would wish for better returns (whether dividends or capital gains) but we do admire the solidFFO growth on show here. As a result of these considerations, CEO compensation seems quite appropriate.

While it is important to pay attention to CEO remuneration, investors should also consider other elements of the business. We've identified 2 warning signs for CareTrust REIT that investors should be aware of in a dynamic business environment.

Switching gears from CareTrust REIT, if you're hunting for a pristine balance sheet and premium returns, this free list of high return, low debt companies is a great place to look.

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