Key Things To Understand About Chatham Lodging Trust's (NYSE:CLDT) CEO Pay Cheque

This article will reflect on the compensation paid to Jeff Fisher who has served as CEO of Chatham Lodging Trust (NYSE:CLDT) since 2009. This analysis will also assess whether Chatham Lodging Trust pays its CEO appropriately, considering its funds from operations growth and total shareholder returns.

See our latest analysis for Chatham Lodging Trust

How Does Total Compensation For Jeff Fisher Compare With Other Companies In The Industry?

At the time of writing, our data shows that Chatham Lodging Trust has a market capitalization of US$545m, and reported total annual CEO compensation of US$4.6m for the year to December 2019. That's a modest increase of 6.1% on the prior year. While we always look at total compensation first, our analysis shows that the salary component is less, at US$625k.

On comparing similar companies from the same industry with market caps ranging from US$200m to US$800m, we found that the median CEO total compensation was US$2.0m. This suggests that Jeff Fisher is paid more than the median for the industry. What's more, Jeff Fisher holds US$11m worth of shares in the company in their own name, indicating that they have a lot of skin in the game.

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, Chatham Lodging Trust more or less reflects the market in terms of setting the salary. If total compensation is slanted towards non-salary benefits, it indicates that CEO pay is linked to company performance.

A Look at Chatham Lodging Trust's Growth Numbers

Chatham Lodging Trust has reduced its funds from operations (FFO) by 66% per year over the last three years. It saw its revenue drop 45% over the last year.

The decline in FFO is a bit concerning. And the impression is worse when you consider revenue is down year-on-year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Historical performance can sometimes be a good indicator on what's coming up next but if you want to peer into the company's future you might be interested in this free visualization of analyst forecasts.

Has Chatham Lodging Trust Been A Good Investment?

Given the total shareholder loss of 41% over three years, many shareholders in Chatham Lodging Trust are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

As previously discussed, Jeff is compensated more than what is normal for CEOs of companies of similar size, and which belong to the same industry. Disappointingly, share price gains over the last three years have failed to materialize. Add to that declining FFO growth, and you have the perfect recipe for shareholder irritation. Overall, with such poor performance, shareholder's would probably have questions if the company decided to give the CEO a raise.

We can learn a lot about a company by studying its CEO compensation trends, along with looking at other aspects of the business. We identified 2 warning signs for Chatham Lodging Trust (1 can't be ignored!) that you should be aware of before investing here.

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.

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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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