Todd Meredith has been the CEO of Healthcare Realty Trust Incorporated (NYSE:HR) since 2016. This report will, first, examine the CEO compensation levels in comparison to CEO compensation at companies of similar size. Next, we’ll consider growth that the business demonstrates. And finally – as a second measure of performance – we will look at the returns shareholders have received over the last few years. The aim of all this is to consider the appropriateness of CEO pay levels.
How Does Todd Meredith’s Compensation Compare With Similar Sized Companies?
According to our data, Healthcare Realty Trust Incorporated has a market capitalization of US$3.4b, and paid its CEO total annual compensation worth US$3.4m over the year to December 2019. That’s a notable increase of 11% on last year. We think total compensation is more important but we note that the CEO salary is lower, at US$525k. We note that more than half of the total compensation is not the salary; and performance requirements may apply to this non-salary portion. 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$5.7m.
Next, let’s break down remuneration compositions to understand how the industry and company compare with each other. On a sector level, around 15% of total compensation represents salary and 85% is other remuneration. Healthcare Realty Trust is largely mirroring the industry average when it comes to the share a salary enjoys in overall compensation
At first glance this seems like a real positive for shareholders, since Todd Meredith is paid less than the average total compensation paid by similar sized companies. However, before we heap on the praise, we should delve deeper to understand business performance. You can see, below, how CEO compensation at Healthcare Realty Trust has changed over time.
Is Healthcare Realty Trust Incorporated Growing?
Healthcare Realty Trust Incorporated has reduced its earnings per share by an average of 50% a year, over the last three years (measured with a line of best fit). Its revenue is up 4.4% over last year.
Unfortunately, earnings per share have trended lower over the last three years. And the modest revenue growth over 12 months isn’t much comfort against the reduced earnings per share. It’s hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Shareholders might be interested in this free visualization of analyst forecasts.
Has Healthcare Realty Trust Incorporated Been A Good Investment?
Since shareholders would have lost about 15% over three years, some Healthcare Realty Trust Incorporated shareholders would surely be feeling negative emotions. This suggests it would be unwise for the company to pay the CEO too generously.
It appears that Healthcare Realty Trust Incorporated remunerates its CEO below most similar sized companies.
The compensation paid to Todd Meredith is lower than is usual at similar sized companies, but the eps growth is lacking, just like the returns (over three years). This contrasts with the increase in CEO remuneration on last year, though it was off a low base. While one could argue it is appropriate for the CEO to be paid less than other CEOs of similar sized companies, given company performance, we would not call the pay overly generous. CEO compensation is an important area to keep your eyes on, but we’ve also identified 6 warning signs for Healthcare Realty Trust (1 is concerning!) that you should be aware of before investing here.
Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of interesting companies.
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