Stock Analysis

Here's Why Shareholders May Want To Be Cautious With Increasing Digital Realty Trust, Inc.'s (NYSE:DLR) CEO Pay Packet

  •  Updated
Source: Shutterstock

Under the guidance of CEO Bill Stein, Digital Realty Trust, Inc. (NYSE:DLR) has performed reasonably well recently. This is something shareholders will keep in mind as they cast their votes on company resolutions such as executive remuneration in the upcoming AGM on 03 June 2021. However, some shareholders may still be hesitant of being overly generous with CEO compensation.

Check out our latest analysis for Digital Realty Trust

Comparing Digital Realty Trust, Inc.'s CEO Compensation With the industry

Our data indicates that Digital Realty Trust, Inc. has a market capitalization of US$44b, and total annual CEO compensation was reported as US$16m for the year to December 2020. We note that's an increase of 33% above last year. We think total compensation is more important but our data shows that the CEO salary is lower, at US$1.0m.

In comparison with other companies in the industry with market capitalizations over US$8.0b , the reported median total CEO compensation was US$7.8m. This suggests that Bill Stein is paid more than the median for the industry.

Component20202019Proportion (2020)
Salary US$1.0m US$1.0m 6%
Other US$15m US$11m 94%
Total CompensationUS$16m US$12m100%

On an industry level, roughly 15% of total compensation represents salary and 85% is other remuneration. It's interesting to note that Digital Realty Trust allocates a smaller portion of compensation to salary in comparison to the broader industry. If non-salary compensation dominates total pay, it's an indicator that the executive's salary is tied to company performance.

NYSE:DLR CEO Compensation May 28th 2021

A Look at Digital Realty Trust, Inc.'s Growth Numbers

Over the past three years, Digital Realty Trust, Inc. has seen its funds from operations (FFO) grow by 13% per year. Its revenue is up 33% over the last year.

Overall this is a positive result for shareholders, showing that the company has improved in recent years. It's great to see that revenue growth is strong, too. These metrics suggest the business is growing strongly. Looking ahead, you might want to check this free visual report on analyst forecasts for the company's future earnings..

Has Digital Realty Trust, Inc. Been A Good Investment?

Most shareholders would probably be pleased with Digital Realty Trust, Inc. for providing a total return of 55% over three years. As a result, some may believe the CEO should be paid more than is normal for companies of similar size.

In Summary...

Given that the company's overall performance has been reasonable, the CEO remuneration policy might not be shareholders' central point of focus in the upcoming AGM. Still, not all shareholders might be in favor of a pay raise to the CEO, seeing that they are already being paid higher than the industry.

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 6 warning signs for Digital Realty Trust you should be aware of, and 2 of them are potentially serious.

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.

If you’re looking to trade Digital Realty 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. Promoted

Valuation is complex, but we're helping make it simple.

Find out whether Digital Realty Trust is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis