Damon Hininger has been the CEO of CoreCivic, Inc. (NYSE:CXW) since 2009, and this article will examine the executive's compensation with respect to the overall performance of the company. This analysis will also evaluate the appropriateness of CEO compensation when taking into account the funds from operations and shareholder returns of the company.
Comparing CoreCivic, Inc.'s CEO Compensation With the industry
At the time of writing, our data shows that CoreCivic, Inc. has a market capitalization of US$790m, and reported total annual CEO compensation of US$5.3m for the year to December 2019. Notably, that's an increase of 30% over the year before. We think total compensation is more important but our data shows that the CEO salary is lower, at US$940k.
In comparison with other companies in the industry with market capitalizations ranging from US$400m to US$1.6b, the reported median CEO total compensation was US$3.2m. This suggests that Damon Hininger is paid more than the median for the industry. What's more, Damon Hininger holds US$1.8m worth of shares in the company in their own name.
Talking in terms of the industry, salary represented approximately 15% of total compensation out of all the companies we analyzed, while other remuneration made up 85% of the pie. CoreCivic pays out 18% 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.
CoreCivic, Inc.'s Growth
CoreCivic, Inc. has reduced its funds from operations (FFO) by 6.2% per year over the last three years. Its revenue is down 1.8% over the previous year.
The decline in FFO is a bit concerning. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..
Has CoreCivic, Inc. Been A Good Investment?
With a three year total loss of 64% for the shareholders, CoreCivic, Inc. would certainly have some dissatisfied shareholders. Therefore, it might be upsetting for shareholders if the CEO were paid generously.
As we noted earlier, CoreCivic pays its CEO higher than the norm for similar-sized companies belonging to the same industry. Unfortunately, this doesn't look great when you see shareholder returns have been negative over the last three years. Arguably worse, we've been waiting for positive FFO growth for the last three years. 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. In our study, we found 5 warning signs for CoreCivic you should be aware of, and 2 of them are concerning.
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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