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In 2015 Ernest Rady was appointed CEO of American Assets Trust, Inc. (NYSE:AAT). This analysis aims first to contrast CEO compensation with other companies that have similar market capitalization. Then we’ll look at a snap shot of the business growth. And finally we will reflect on how common stockholders have fared in the last few years, as a secondary measure of performance. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Ernest Rady’s Compensation Compare With Similar Sized Companies?
Our data indicates that American Assets Trust, Inc. is worth US$2.8b, and total annual CEO compensation is US$2.5m. (This is based on the year to 2017). While this analysis focuses on total compensation, it’s worth noting the salary is lower, valued at US$515k. When we examined a selection of companies with market caps ranging from US$2.0b to US$6.4b, we found the median CEO compensation was US$4.8m.
This would give shareholders a good impression of the company, since most similar size companies have to pay more, leaving less for shareholders. While this is a good thing, you’ll need to understand the business better before you can form an opinion.
The graphic below shows how CEO compensation at American Assets Trust has changed from year to year.
Is American Assets Trust, Inc. Growing?
On average over the last three years, American Assets Trust, Inc. has shrunk earnings per share by 26% each year (measured with a line of best fit). In the last year, its revenue is up 6.5%.
Few shareholders would be pleased to read that earnings per share are lower 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. So given this relatively weak performance, shareholders would probably not want to see high compensation for the CEO. You might want to check this free visual report on analyst forecasts for future earnings.
Has American Assets Trust, Inc. Been A Good Investment?
With a total shareholder return of 31% over three years, American Assets Trust, Inc. shareholders would, in general, be reasonably content. But they probably don’t want to see the CEO paid more than is normal for companies around the same size.
It appears that American Assets Trust, Inc. remunerates its CEO below most similar sized companies.
Ernest Rady is remunerated more modestly than is a normal at similar sized companies. But the company lacks earnings per share growth, and returns to shareholders are less than stellar. We would like to see EPS growth from the business, although we wouldn’t say the CEO pay is high. CEO compensation is one thing, but it is also interesting to check if the CEO is buying or selling American Assets Trust (free visualization of insider trades).
Important note: American Assets Trust may not be the best stock to buy. You might find something better in this list of interesting companies with high ROE and low debt.
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 firstname.lastname@example.org.