Should You Worry About American Assets Trust, Inc.’s (NYSE:AAT) CEO Pay Cheque?

Ernest Rady has been the CEO of American Assets Trust, Inc. (NYSE:AAT) since 2015. First, this article will compare CEO compensation with compensation at similar sized companies. 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. This method should give us information to assess how appropriately the company pays the CEO.

Check out our latest analysis for American Assets Trust

How Does Ernest Rady’s Compensation Compare With Similar Sized Companies?

At the time of writing our data says that American Assets Trust, Inc. has a market cap of US$3.6b, and is paying total annual CEO compensation of US$3.9m. (This is based on the year to December 2018). We think total compensation is more important but we note that the CEO salary is lower, at US$530k. We looked at a group of companies with market capitalizations from US$2.0b to US$6.4b, and the median CEO total compensation was US$5.1m.

That means Ernest Rady receives fairly typical remuneration for the CEO of a company that size. While this data point isn’t particularly informative alone, it gains more meaning when considered with business performance.

You can see, below, how CEO compensation at American Assets Trust has changed over time.

NYSE:AAT CEO Compensation, August 20th 2019
NYSE:AAT CEO Compensation, August 20th 2019

Is American Assets Trust, Inc. Growing?

Over the last three years American Assets Trust, Inc. has shrunk its earnings per share by an average of 12% per year (measured with a line of best fit). It achieved revenue growth of 1.5% over the last year.

Sadly for shareholders, earnings per share are actually down, over three years. The fairly low revenue growth fails to impress given that the earnings per share is down. These factors suggest that the business performance wouldn’t really justify a high pay packet for the CEO.

Has American Assets Trust, Inc. Been A Good Investment?

American Assets Trust, Inc. has served shareholders reasonably well, with a total return of 15% over three years. But they would probably prefer not to see CEO compensation far in excess of the median.

In Summary…

Ernest Rady is paid around the same as most CEOs of similar size companies.

We’re not seeing great strides in earnings per share, and total returns were decent but not amazing in the last three years. We do not think the CEO pay is a problem, but it’s probably fair to say that many shareholders would like to see improved performance, before any pay rise occurs. Shareholders may want to check for free if American Assets Trust insiders are buying or selling shares.

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.

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. 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. Simply Wall St has no position in the stocks mentioned. Thank you for reading.