We Think The Compensation For Lamar Advertising Company (REIT)'s (NASDAQ:LAMR) CEO Looks About Right

Simply Wall St
May 14, 2021

Shareholders may be wondering what CEO Sean Reilly plans to do to improve the less than great performance at Lamar Advertising Company (REIT) (NASDAQ:LAMR) recently. At the next AGM coming up on 20 May 2021, they can influence managerial decision making through voting on resolutions, including executive remuneration. It has been shown that setting appropriate executive remuneration incentivises the management to act in the interests of shareholders. We think CEO compensation looks appropriate given the data we have put together.

View our latest analysis for Lamar Advertising Company (REIT)

Comparing Lamar Advertising Company (REIT)'s CEO Compensation With the industry

Our data indicates that Lamar Advertising Company (REIT) has a market capitalization of US$10b, and total annual CEO compensation was reported as US$3.9m for the year to December 2020. That's a notable decrease of 21% on last year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$700k.

On comparing similar companies in the industry with market capitalizations above US$8.0b, we found that the median total CEO compensation was US$7.8m. Accordingly, Lamar Advertising Company (REIT) pays its CEO under the industry median. What's more, Sean Reilly holds US$161m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

Component20202019Proportion (2020)
Salary US$700k US$700k 18%
Other US$3.2m US$4.3m 82%
Total CompensationUS$3.9m US$5.0m100%

On an industry level, roughly 15% of total compensation represents salary and 85% is other remuneration. Lamar Advertising Company (REIT) is paying a higher share of its remuneration through a salary in comparison to the overall industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

NasdaqGS:LAMR CEO Compensation May 14th 2021

Lamar Advertising Company (REIT)'s Growth

Lamar Advertising Company (REIT) has reduced its funds from operations (FFO) by 1.8% per year over the last three years. In the last year, its revenue is down 14%.

Its a bit disappointing to see that the company has failed to grow its FFO. And the impression is worse when you consider revenue is down year-on-year. These factors suggest that the business performance wouldn't really justify a high pay packet for the CEO. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Lamar Advertising Company (REIT) Been A Good Investment?

We think that the total shareholder return of 71%, over three years, would leave most Lamar Advertising Company (REIT) shareholders smiling. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us wonder if these strong returns can continue. Shareholders might want to question the board about these concerns, and revisit their investment thesis for the company.

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. We've identified 3 warning signs for Lamar Advertising Company (REIT) that investors should be aware of in a dynamic business environment.

Important note: Lamar Advertising Company (REIT) 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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