How Does American Assets Trust's (NYSE:AAT) CEO Salary Compare to Peers?

By
Simply Wall St
Published
November 14, 2020
NYSE:AAT

Ernest Rady became the CEO of American Assets Trust, Inc. (NYSE:AAT) in 2015, and we think it's a good time to look at the executive's compensation against the backdrop of overall company performance. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the funds from operations and shareholder returns of the company.

See our latest analysis for American Assets Trust

Comparing American Assets Trust, Inc.'s CEO Compensation With the industry

Our data indicates that American Assets Trust, Inc. has a market capitalization of US$1.9b, and total annual CEO compensation was reported as US$3.8m for the year to December 2019. That's a slightly lower by 4.0% over the previous year. While this analysis focuses on total compensation, it's worth acknowledging that the salary portion is lower, valued at US$546k.

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. So it looks like American Assets Trust compensates Ernest Rady in line with the median for the industry. Furthermore, Ernest Rady directly owns US$188m worth of shares in the company, implying that they are deeply invested in the company's success.

Component20192018Proportion (2019)
Salary US$546k US$530k 14%
Other US$3.2m US$3.4m 86%
Total CompensationUS$3.8m US$3.9m100%

On an industry level, roughly 15% of total compensation represents salary and 85% is other remuneration. Although there is a difference in how total compensation is set, American Assets Trust more or less reflects the market in terms of setting the salary. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

ceo-compensation
NYSE:AAT CEO Compensation November 14th 2020

American Assets Trust, Inc.'s Growth

American Assets Trust, Inc.'s funds from operations (FFO) grew 32% per yearover the last three years. In the last year, its revenue is up 3.7%.

This demonstrates that the company has been improving recently and is good news for the shareholders. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 American Assets Trust, Inc. Been A Good Investment?

With a three year total loss of 27% for the shareholders, American Assets Trust, Inc. would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

In Summary...

As we noted earlier, American Assets Trust pays its CEO in line with similar-sized companies belonging to the same industry. Meanwhile, shareholder returns paint a sorry picture for the company, finishing in the red over the last three years. But on the bright side, FFO growth is positive over the same period. Considering positive FFO growth, we'd say compensation is fair, but shareholders may be wary of a bump in pay before the company logs positive returns.

It is always advisable to analyse CEO pay, along with performing a thorough analysis of the company's key performance areas. In our study, we found 2 warning signs for American Assets Trust you should be aware of, and 1 of them is a bit unpleasant.

Arguably, business quality is much more important than CEO compensation levels. So check out this free list of interesting companies that have HIGH return on equity and low debt.

Promoted
If you’re looking to trade American Assets Trust, open an account with the lowest-cost* platform trusted by professionals, Interactive Brokers. Their clients from over 200 countries and territories trade stocks, options, futures, forex, bonds and funds worldwide from a single integrated account.


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.
*Interactive Brokers Rated Lowest Cost Broker by StockBrokers.com Annual Online Review 2020


Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com.

Discounted cash flow calculation for every stock

Simply Wall St does a detailed discounted cash flow calculation every 6 hours for every stock on the market, so if you want to find the intrinsic value of any company just search here. It’s FREE.


Simply Wall St character - Warren

Simply Wall St

Simply Wall St is a financial technology startup focused on providing unbiased, high-quality research coverage on every listed company in the world. Our research team consists of equity analysts with a public, market-beating track record. Learn more about the team behind Simply Wall St.