It's Unlikely That The CEO Of Clipper Realty Inc. (NYSE:CLPR) Will See A Huge Pay Rise This Year

In the past three years, shareholders of Clipper Realty Inc. (NYSE:CLPR) have seen a loss on their investment. Despite positive EPS growth in the past few years, the share price hasn't tracked the fundamental performance of the company. Shareholders may want to question the board on the future direction of the company at the upcoming AGM on 17 June 2021. They could also influence management through voting on resolutions such as executive remuneration. Here's our take on why we think shareholders may want to be cautious of approving a raise for the CEO at the moment.

See our latest analysis for Clipper Realty

Comparing Clipper Realty Inc.'s CEO Compensation With the industry

Our data indicates that Clipper Realty Inc. has a market capitalization of US$337m, and total annual CEO compensation was reported as US$1.6m for the year to December 2020. Notably, that's an increase of 26% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$546k.

On examining similar-sized companies in the industry with market capitalizations between US$200m and US$800m, we discovered that the median CEO total compensation of that group was US$1.9m. From this we gather that David Bistricer is paid around the median for CEOs in the industry. Furthermore, David Bistricer directly owns US$5.6m worth of shares in the company, implying that they are deeply invested in the company's success.

Component	2020	2019	Proportion (2020)
Salary	US$546k	US$520k	35%
Other	US$1.0m	US$717k	65%
Total Compensation	US$1.6m	US$1.2m	100%

On an industry level, around 15% of total compensation represents salary and 85% is other remuneration. Clipper Realty pays out 35% of remuneration in the form of a salary, significantly higher than the industry average. It's important to note that a slant towards non-salary compensation suggests that total pay is tied to the company's performance.

A Look at Clipper Realty Inc.'s Growth Numbers

Clipper Realty Inc. has seen its funds from operations (FFO) increase by 13% per year over the past three years. Its revenue is up 2.0% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's nice to see revenue heading northwards, as this is consistent with healthy business conditions. 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 Clipper Realty Inc. Been A Good Investment?

Given the total shareholder loss of 4.9% over three years, many shareholders in Clipper Realty Inc. are probably rather dissatisfied, to say the least. Therefore, it might be upsetting for shareholders if the CEO were paid generously.

To Conclude...

The fact that shareholders are sitting on a loss on the value of their shares in the past few years is certainly disconcerting. The fact that the stock price hasn't grown along with earnings may indicate that other issues may be affecting that stock. Shareholders would probably be keen to find out what are the other factors could be weighing down the stock. At the upcoming AGM, shareholders will get the opportunity to discuss any issues with the board, including those related to CEO remuneration and assess if the board's plan will likely improve performance in the future.

CEO compensation can have a massive impact on performance, but it's just one element. We did our research and spotted 2 warning signs for Clipper Realty that investors should look into moving forward.

Of course, you might find a fantastic investment by looking at a different set of stocks. So take a peek at this free list of interesting companies.

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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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